Concept explainers
a)
The retained earnings statement: This is a financial statement that shows the amount of net income retained by a company at a particular point of time for reinvestment and pays its debts and obligations. It shows the amount of retained earnings that is not paid as dividends to shareholders.
The missing amounts of Retained Earnings Statement of Incorporation D.
a)
Explanation of Solution
The following is the retained earnings statement of Incorporation D.
Incorporation D | |
Retained Earnings Statement | |
For the month ended | |
Particulars | Amounts ($) |
Beginning retained earnings | 12,000 |
Add: Net income | 20,000 (e) |
Less: Dividends | 5,000 |
Ending retained earnings | 27,000 |
Table (1)
Working Notes:
Compute the net income of incorporation D.
Beginning retained earnings = $12,000
Dividends = $5,000
Ending retained earnings = $27,000
Therefore, the net income is $20,000
b)
The income statement: This is a financial statement that shows the net income earned or net loss suffered by a company through reporting all the revenues earned and expenses incurred by the company over a specific period of time. An income statement is also known as an operations statement, an earnings statement, a revenue statement, or a
The missing amounts of Income Statement of Incorporation D.
b)
Explanation of Solution
The following is the income statement of Incorporation D.
Incorporation D | |
Income Statement | |
For the year ended | |
Particulars | Amounts ($) |
Revenues | 85,000 |
Less: Cost of goods sold | 55,000 (c) |
Less: Salaries and wages expense | 10,000 |
Net Income | 20,000 (d) |
Table (2)
Working Notes:
Compute the cost of goods sold of incorporation D.
Revenues = $85,000
Salaries and wages expense = $10,000
Net Income = $20,000 (e)
Compute the net income of incorporation D.
Revenues = $85,000
Salaries and wages expense = $10,000
Cost of goods sold = $55,000 (c)
Therefore, the cost of goods sold is $55,000 and the net income is $20,000.
c)
The balance sheet: This is a financial statement that shows the assets, liabilities, and
The missing amounts of Balance Sheet of Incorporation D.
c)
Explanation of Solution
The following is the balance sheet of Incorporation D.
Incorporation D | |||
Balance Sheet Statement | |||
As at the end of the year | |||
Assets |
Amounts ($) |
Liabilities and Stockholders’ Equity |
Amount ($) |
Cash | 7,000 | Liabilities: | |
Inventory | 10,000 | Accounts Payable | 5,000 |
Buildings | 45,000 | Stockholders’ Equity | |
Common stock | 30,000 (a) | ||
Retained earnings | 27,000 (b) | ||
Total Assets | 62,000 |
Total Liabilities and Stockholders’ Equity | 62,000 |
Table (3)
Working Notes:
Compute the common stock of incorporation D.
Accounts payable = $5,000
Retained earnings = $27,000 [Refer Table (1)]
Total liabilities and stockholders’ equity = $62,000
Compute the retained earnings of incorporation D.
Accounts payable = $5,000
Common stock = $30,000 (a)
Total liabilities and stockholders’ equity = $62,000
Therefore, the common stock is $30,000 and the retained earnings is $27,000.
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Chapter 1 Solutions
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