Step-by-step explanation:
To determine the balance of the common stock account, we need to calculate the difference between the total assets and the total liabilities and retained earnings.
Given:
Cash: $4,900
Accounts Payable: $1,500
Accounts Receivable: $2,000
Land: $8,500
Retained Earnings, January 1: $3,200
Revenue: $10,000
Expenses: $7,500
Total Assets = Cash + Accounts Receivable + Land
Total Assets = $4,900 + $2,000 + $8,500 = $15,400
Total Liabilities and Equity = Accounts Payable + Common Stock + Retained Earnings
Total Liabilities and Equity = $1,500 + Common Stock + $3,200
Since the balance of Retained Earnings is given as $3,200, we can rewrite the equation as:
Total Liabilities and Equity = $1,500 + Common Stock + $3,200 = $4,700 + Common Stock
Now, we can set up an equation by equating the total assets with the total liabilities and equity:
Total Assets = Total Liabilities and Equity
$15,400 = $4,700 + Common Stock
Solving for Common Stock:
Common Stock = $15,400 - $4,700
Common Stock = $10,700
Therefore, the balance of the common stock account is $10,700.