Ken Young and Kim Sherwood organized Reader Direct as a corporation; each contributed $46,000 cash to start the business and received 4,000 shares of stock. The store completed its first year of operations on December 31, 2020. On that date, the following financial items for the year were determined: cash on hand and in the bank, $41,500; amounts due from customers from sales of books, $27,600; equipment, $45,000; amounts owed to publishers for books purchased, $8,100; one-year notes payable to a local bank for $3,900. No dividends were declared or paid to the stockholders during the year. 2. Using the retained earnings equation and an openind balance of $0, work backwards to compute the amount of net income for the year ended December 31, 2020. Net Income = Ending RE + Dividends-Beginning RE

Ken Young and Kim Sherwood organized Reader Direct as a corporation; each contributed $46,000 cash to start the business and received 4,000 shares of stock. The store completed its first year of operations on December 31, 2020. On that date, the following financial items for the year were determined: cash on hand and in the bank, $41,500; amounts due from customers from sales of books, $27,600; equipment, $45,000; amounts owed to publishers for books purchased, $8,100; one-year notes payable to a local bank for $3,900. No dividends were declared or paid to the stockholders during the year. 2. Using the retained earnings equation and an openind balance of $0, work backwards to compute the amount of net income for the year ended December 31, 2020. Net Income = Ending RE + Dividends-Beginning RE

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter13: Choice Of Business Entity—general Tax And Nontax Factors/formation

Section: Chapter Questions

Problem 56P

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