Concept explainers
a.
Prepare a
a.

Explanation of Solution
Balance sheet:
This financial statement reports a company’s resources (assets) and claims of creditors (liabilities) and stockholders (stockholders’ equity) over those resources. The resources of the company are assets which include money contributed by stockholders and creditors. Hence, the main elements of the balance sheet are assets, liabilities, and stockholders’ equity.
Prepare a balance sheet as of December 31 of the Year 2015.
Incorporation LJ | ||||
Balance sheet as on December 31, 2015 | ||||
Amount ($) | Amount ($) | Amount ($) | ||
Assets | Liabilities | |||
Cash | 22,000 | Accounts Payable | 9,000 | |
31,000 | Mortgage Payable | 103,000 | ||
Land | 46,000 | Total liabilities | 112,000 | |
Building, net | 260,000 | Stockholders' equity | ||
Equipment, net | 46,000 | Common stock | 225,000 | |
Supplies | 16,000 | 79,000 | 304,000 | |
Total stockholders’ equity | ||||
Total assets | $416,000 | Total liabilities and stockholders’ equity | $416,000 |
Table (1)
Prepare a balance sheet as of December 31 of the Year 2016.
Incorporation LJ | ||||
Balance sheet as on December 31, 2016 | ||||
Amount ($) | Amount ($) | Amount ($) | ||
Assets | Liabilities | |||
Cash | 25,000 | Accounts Payable | 6,000 | |
Accounts receivable | 39,000 | Mortgage Payable | 93,000 | |
Land | 46,000 | Total liabilities | 99,000 | |
Building, net | 250,000 | Stockholders' equity | ||
Equipment, net | 44,000 | Common stock | 225,000 | |
Supplies | 18,000 | Retained earnings | 98,000 | |
Total stockholders’ equity | 323,000 | |||
Total assets | $422,000 | Total liabilities and stockholders’ equity | $422,000 |
Table (2)
Working notes:
Calculate the retained earnings for the year 2015.
Calculate the retained earnings for the year 2016.
b.
Prepare a statement of stockholders’ equity for 2016.
b.

Explanation of Solution
Statement of stockholder’ equity:
This statement reports the beginning stockholders’ equity and all the changes, which led to ending stockholders’ equity. Additional capital, net income from income statement is added to and drawings are deducted from beginning stockholders’ equity to arrive at the result, ending stockholders’ equity.
Prepare a statement of stockholders’ equity for 2016.
Incorporation LJ | |
Statement of stockholders' equity | |
For the year ended December 31, 2016 | |
Particulars | Amount ($) |
Retained Earnings, Beginning (Refer Table (1)) | 79,000 |
Add: Net income | 39,000 |
118,000 | |
Less: Dividends | 20,000 |
Retained Earnings, Ending (Refer Table (2)) | $98,000 |
Table (3)
Working note:
Calculate the net income.
Want to see more full solutions like this?
Chapter 1 Solutions
Financial Accounting for Undergr. -Text Only (Instructor's)
- The predetermined overhead rate for Silver Inc. is $9, which is made up of a variable overhead rate of $5 and a fixed rate of $4. The budgeted overhead costs at a normal capacity of 60,000 direct labor hours were divided by the normal capacity of 60,000 hours to arrive at the predetermined overhead rate of $9. Actual overhead for September was $18,000 variable and $14,400 fixed, and the standard hours allowed for the product produced in September were 5,000 hours. What is the total overhead variance? A. $1,400 U B. $1,400 F C. $600 U D. $600 Farrow_forwardWhat is the amount allocated to ending inventory.arrow_forwardA retail business has total sales of $950,000, total equity of $625,000, a profit margin of 5.2%, and a debt-equity ratio of 0.65%. What is the return on assets?arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education





