Kimmel Accounting 6e Help I System Announcements ESOURCES Ex

Kimmel, Accounting, 6e Help I System Announcements ESOURCES Exercise 1-9 Here are incomplete financial statements for Donavan, Inc. Calculate the missing amounts. pter 1 1-1 3 DONAVAN, INC Balance Sheet Assets 7,000 10,000 45,000 $62,000 Cash Total assets Liabilities and Stockholders\' Equity Accounts payable Stockholders\' Equity 5,000 ults by Study Common stock Retained earnings Total liabilities and stockholders\' equity DONAVAN, INC. $85,000 Cost of goods sold Salaries and wages Net Income DONAVAN, INC Beginning retained Add: Net income Less: Dividends $12,000 5,000

Solution

Answer

In Retain Earnings Statement, Ending Retained Earnings is $27,000, Dividend = 5,000 Opening Retained earnings is $12,000 so we can find Net income,

Net Income = Closing Retained Earnings + Dividend - Opening Retained Earnings

= 27,000 + 5,000 – 12,000

Net Income = $20,000

In Income Statement, Revenue = 85,000 Salaries and Wages expense is 10,000 and Above we found Net Income, so now we can find Cost of Goods Sold

Cost of Goods Sold = Revenue – Salaries and Wages expense – Net Income

= 85,000 – 10,000 – 20,000

Cost of Goods Sold = $55,000

In Balance Sheet, Total Liabilities and Equity = 62,000, Accounts Payable = 5,000 and Retain Earnings = 27,000 (Already given in question), so now we can find Common Stock

Common Stock = Total Liabilities and Equity - Accounts Payable - Retain Earnings

= 62,000 – 5,000 – 27,000

Common Stock = $30,000

NOW,

a = $30,000

b = $27,000

c = $55,000

d = e = $20,000