Ko Questions 810 of 23 E14 Completing a Balance Sheet and In

Ko Questions 8-10 (of 23) E1-4 Completing a Balance Sheet and Inferring Net Income [LO 1-2, LO 1-3] [The following information applies to the questions displayed below.] Ken Young and Kim Sherwood organized Reader Direct as a corporation; each contributed $50,000 cash to start the business and received 4,000 shares of stock. The store completed its first year of operations on December 31, 2014. On that date, the following financial items for the year were determined: cash on hand and in the bank, $45,500, amounts due from customers from sales of books, $28,000: equipment, $49,000; amounts owed to publishers for books purchased, $8500, one-year note payable to a local bank for $4,500. No dividends were declared or paid to the stockholders during the year. References E1-4 Completing a Balance Sheet and Inferring Net Income ILO 1-2. LO 1-3) Section Break value:

Solution

2. Amount of Net income

Ending Retained Earnings = $9,500

Add: Dividend = $0

Less: Beginning Retained Earnings = $0

Net Income = $9,500

4. Amount of Ending Retained Earnings

Beginning Retained Earnings = $9,500

Add: Net Income = $8,500

Less: Dividend paid = -$3,100

Ending Retained Earnings = $14,900