Question

Here are incomplete financial statements for Donavan, Inc. Calculate the missing amounts. DONAVAN, INC. Balance Sheet Assets Cash $ 12,100 Inventory 15,100 Buildings 39,900 Total assets $67,100 Liabilities and Stockholders' Equity Liabilities Accounts payable $ 6,000 Stockholders' Equity Common stock _________Retained earnings _______Total liabilities and stockholders' equity $67,100

Answer 1

Common Stock = $29,000

Retained Earnings = $32,100

Step-by-step explanation:

Donovan Inc.

Balance Sheet

As of December 31, 20YY

Assets

Cash $ 12,100

Inventory 15,100

Buildings 39,900

Total assets $67,100

Liabilities and Stockholders' Equity

Accounts payable $ 6,000

Stockholders' Equity

Common Stock $29,000 (Balancing, see the notes)

Retained Earnings $32,100 (Statement of retained earnings)

Total liabilities and stockholders' equity $67,100

Notes: Common stock = Total L&OE - Liabilities - Retained earnings

Common stock = $67,100 - 6,000 - 32,100 = $29,000

To determine common stock, we need to find the retained earnings. The following statement of owners' equity will give that data.

To determine the net income, we need to check the retained earnings statement.

Donovan Inc.

Statement of owners' equity

For the year ended, December 31, 20YY

Beginning retained earnings $17,100

Add; Net Income 19,780 (Note: 1)

Less: Dividends (4,780)

Ending retained earnings $32,100

Note (1): Ending R.E = Begining R.E + Net Income - Dividends

$32,100 = $17,100 + NI - $4,780

NI = $32,100 - 12,320

Net Income = $19,780