The following information was obtained from the records of S

The following information was obtained from the records of Shae, Inc.: s 112 500 Notes payable (long-term) Sales Buildings and equipment Selling. general, and administrative expenses Accounts receivable Common stock (34,000 shares) Income tax expense Cash Retained earnings, 1/1/16 Accrued liabilities Cost of goods sold 37 500 26.250 7.500 225.000 01,250 Interest expense Accounts payable Dividends declared and paid during 2016 1,638 Except as otherwise indicated, assume that all balance sheet items reflect account balances at December 31, 2016, and that all income statement items reflect activities that occurred during the year ended December 31, 2016. There were no changes in paid-in capital during the year Required: a. Prepare an income statement and statement of changes in stockholders\' equity for the year ended December 31, 2016, and a balance sheet at December 31, 2016, for Shae, Inc. Based on the financial statements that you have prepared for part a, answer the questions in parts b-e of goods sold proft Paid-in capital

Solution

Solution:

Part 1 --- Income Statement ---- is prepared correct in the question.

Part 2 --- Correct Statement of Change in Stockholders’ Equity is as follows:

SHAE INC.

Statement of Change in Stockholders\' Equity

For the Year Ended December 31, 2016

Paid in Capital:

Common Stock

$170,000

Retained Earnings

Beginning balance (given as on 1/1/16)

$104,550

Net Income

$61,250

Less: Dividends declared and paid

-$11,638

Ending balance

$154,162

Total Stockholders\' Equity

$324,162

Part 3 --- Balance Sheet

SHAE INC.

Balance Sheet

December 31, 2016

Assets:

Cash

$201,662

Accounts Receivable

$56,250

Merchandise Inventory

$112,500

Total Current Assets

$370,412

Building and Equipment

$225,000

Less: Accumulated Depreciation

-$101,250

$123,750

Total Assets

$494,162

Liabilities

Accrued Liabilities

$7,500

Accounts Payable

$37,500

Notes Payable (long term)

$125,000

Total Liabilities

$170,000

Stockholders\' Equity

Common stock

$170,000

Retained Earnings

$154,162

Total Stockholders\' Equity

$324,162

Total Liabilities and Stockholders\' Equity

$494,162

Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you

SHAE INC.
Statement of Change in Stockholders\' Equity
For the Year Ended December 31, 2016
Paid in Capital:
Common Stock		$170,000
Retained Earnings
Beginning balance (given as on 1/1/16)	$104,550
Net Income	$61,250
Less: Dividends declared and paid	-$11,638
Ending balance		$154,162
Total Stockholders\' Equity		$324,162