Financial Accounting for Undergraduates
Financial Accounting for Undergraduates
2nd Edition
ISBN: 9781618530400
Author: FERRIS
Publisher: Cambridge
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Chapter 1, Problem 4BP

a.

To determine

Prepare a balance sheet as of December 31 of each year.

a.

Expert Solution
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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 2012.

Incorporation JP
Balance sheet as on December 31, 2012
Amount ($)Amount ($)Amount ($)
Assets Liabilities  
Cash8,000Accounts Payable1,600 
Accounts receivable17,500Notes Payable25,000 
Equipment, net27,000Total liabilities 26,600
Supplies4,200Stockholders' equity 
  Common stock5,000 
  Retained earnings 25,100 
  Total stockholders’ equity 30,100
Total assets$56,700Total liabilities and stockholders’ equity$56,700

Table (1)

Prepare a balance sheet as of December 31 of the Year 2013.

Incorporation JP
Balance sheet as on December 31, 2013
Amount ($)Amount ($)Amount ($)
Assets Liabilities  
Cash10,000Accounts Payable1,800 
Accounts receivable22,800Notes Payable25,000 
Equipment, net32,000Total liabilities 26,800
Supplies4,700Stockholders' equity 
  Common stock5,000 
  Retained earnings 37,700 
  Total stockholders’ equity 42,700
Total assets$69,500Total liabilities and stockholders’ equity$69,500

Table (2)

Working notes:

Calculate the retained earnings for the year 2012.

Assets = Liabilities + Stockholders’ equity(Cash +Accounts receivableEquipment, net + Supplies )=(Accounts payable+Notes Payable) +(Common stock + Retained earnings )

($8,000+$17,500+$27,000+$4,200)=($1,600+$25,000)+($5,000+Retained earnings)$56,700=$26,600+$5,000+Retained earnings$56,700=$31,600 +Retained earnings

Retained earnings=$56,700$31,600Retained earnings=$25,100

Calculate the retained earnings for the year 2013.

Assets = Liabilities + Stockholders’ equity(Cash +Accounts receivableEquipment, net + Supplies )=(Accounts payable+Notes Payable) +(Common stock + Retained earnings )

($10,000+$22,800+$32,000+$4,700)=($1,800+$25,000)+($5,000+Retained earnings)$69,500=$26,800+$5,000+Retained earnings$69,500=$31,800 +Retained earnings

Retained earnings=$69,500$31,800Retained earnings=$37,700

b.

To determine

Prepare a statement of stockholders’ equity for 2013.

b.

Expert Solution
Check Mark

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 2013.

Incorporation JP
Statement of stockholders' equity
For the year ended December 31, 2013
ParticularsAmount ($)
Retained Earnings, Beginning (Refer Table (1))25,100
Add: Net income24,600
49,700
Less: Dividends12,000
Retained Earnings, Ending (Refer Table (2))$37,700

Table (3)

Working note:

Calculate the net income.

(Retained earnings (Beginning) + Net income Dividends) = Retained earnings (Ending)$25,100+Net income  $12,000=$37,700Net income=$37,700$25,100+$12,000Net income=$24,600

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Chapter 1 Solutions

Financial Accounting for Undergraduates

Ch. 1 - Prob. 11SSQCh. 1 - Prob. 12SSQCh. 1 - Prob. 13SSQCh. 1 - Prob. 1QCh. 1 - Prob. 2QCh. 1 - Prob. 3QCh. 1 - Prob. 4QCh. 1 - Prob. 5QCh. 1 - Prob. 6QCh. 1 - Prob. 7QCh. 1 - Prob. 8QCh. 1 - Prob. 9QCh. 1 - Prob. 10QCh. 1 - Prob. 11QCh. 1 - Prob. 12QCh. 1 - Prob. 13QCh. 1 - Prob. 14QCh. 1 - Prob. 15QCh. 1 - Prob. 16QCh. 1 - Prob. 17QCh. 1 - Prob. 18QCh. 1 - Prob. 19QCh. 1 - Prob. 20QCh. 1 - Prob. 21QCh. 1 - Prob. 22QCh. 1 - Prob. 23QCh. 1 - Prob. 1SECh. 1 - Prob. 2SECh. 1 - Prob. 3SECh. 1 - Prob. 4SECh. 1 - Prob. 5SECh. 1 - Prob. 6SECh. 1 - Prob. 7SECh. 1 - Prob. 8SECh. 1 - Prob. 9SECh. 1 - Prob. 10SECh. 1 - Prob. 11SECh. 1 - Prob. 12SECh. 1 - Prob. 13SECh. 1 - Prob. 14SECh. 1 - Prob. 15SECh. 1 - Prob. 16SECh. 1 - Prob. 17SECh. 1 - Prob. 18SECh. 1 - Prob. 19SECh. 1 - Prob. 1AECh. 1 - Prob. 2AECh. 1 - Prob. 3AECh. 1 - Prob. 4AECh. 1 - Prob. 5AECh. 1 - Prob. 6AECh. 1 - Prob. 7AECh. 1 - Prob. 8AECh. 1 - Prob. 9AECh. 1 - Prob. 10AECh. 1 - Prob. 11AECh. 1 - Prob. 12AECh. 1 - Prob. 13AECh. 1 - Prob. 14AECh. 1 - Prob. 15AECh. 1 - Prob. 16AECh. 1 - Prob. 17AECh. 1 - Prob. 18AECh. 1 - Prob. 19AECh. 1 - Prob. 20AECh. 1 - Prob. 1BECh. 1 - Prob. 2BECh. 1 - Prob. 3BECh. 1 - Prob. 4BECh. 1 - Prob. 5BECh. 1 - Prob. 6BECh. 1 - Prob. 7BECh. 1 - Prob. 8BECh. 1 - Prob. 9BECh. 1 - Prob. 10BECh. 1 - Prob. 11BECh. 1 - Prob. 12BECh. 1 - Prob. 13BECh. 1 - Prob. 14BECh. 1 - Prob. 15BECh. 1 - Prob. 16BECh. 1 - Prob. 17BECh. 1 - Prob. 18BECh. 1 - Prob. 19BECh. 1 - Prob. 1APCh. 1 - Prob. 2APCh. 1 - Prob. 3APCh. 1 - Prob. 4APCh. 1 - Prob. 5APCh. 1 - Prob. 6APCh. 1 - Prob. 7APCh. 1 - Prob. 8APCh. 1 - Prob. 9APCh. 1 - Prob. 10APCh. 1 - Prob. 11APCh. 1 - Prob. 1BPCh. 1 - Prob. 2BPCh. 1 - Prob. 3BPCh. 1 - Prob. 4BPCh. 1 - Prob. 5BPCh. 1 - Prob. 6BPCh. 1 - Prob. 7BPCh. 1 - Prob. 8BPCh. 1 - Prob. 9BPCh. 1 - Prob. 10BPCh. 1 - Prob. 1SPCh. 1 - Prob. 1EYKCh. 1 - Prob. 2EYKCh. 1 - Prob. 3EYKCh. 1 - Prob. 4EYKCh. 1 - Prob. 5EYKCh. 1 - Prob. 6EYKCh. 1 - Prob. 7EYKCh. 1 - Prob. 8EYKCh. 1 - Prob. 9EYKCh. 1 - Prob. 10EYKCh. 1 - Prob. 11EYK
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