As of December 31, Year 1, Flowers Company had total assets of $70,000, total liabilities of $21,000, and common stock of $35,000. The company’s Year 1 income statement contained revenue of $12,000 and expenses of $7,000. The Year 1 statement of changes in stockholders’ equity stated that $800 of dividends were paid to investors.
a. Determine the before-closing balance in the Retained Earnings account on December 31, Year 1.
b. Determine the after-closing balance in the Retained Earnings account on December 31, Year 1.
c. Determine the before-closing balances in the Revenue, Expense, and Dividend accounts on December 31, Year 1.
d. Determine the after-closing balances in the Revenue, Expense, and Dividend accounts on December 31, Year 1.
f. On January 1, Year 2, Flowers Company raised $18,000 by issuing additional common stock. Immediately after the additional capital was raised, Flowers reported total stockholders' equity of $67,000. Are the stockholders of Flowers in a better financial position than they were on December 31, Year 1?