1600000 1150000 for stock 300000 for dividends

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Unformatted text preview: r dividends + net income ($50,000) = $2,500,000 Download free ebooks at bookboon.com 8 Accounting Cycle Exercises I Problem 2 Problem 2 TOP Corporation was formed at the beginning of 20X2, and presents the following incomplete financial statements for three years. TOP has requested your help in completing the missing values for each year. Hint: Begin by solving the unknowns in the 20X2 year, and work forward to subsquent years. Remember that 20X2 is the first year of business, so TOP begins with a zero balance in 20X2 beginning retained earnings. TOP CORPORATION Income Statement For the Years Ending December 31, 20XX 20X4 20X3 20X2 Revenues Services to customers $ 100,000 ? $ 50,000 Expenses Wages $ 58,500 ? Interest Net income 1,500 1,500 ? ? 2,500 ? $ 20,000 ? ? ? TOP CORPORATION Statement of Retained Earnings For the Years Ending December 31, 20XX 20X4 Beginning retained earnings ? Plus: Net income 20X3 ? ? $ 20,000 ? - ? $ ? $ 12,500 15,000 Less: Dividends Ending retained earnings 20X2 ? ? 30,000 ? ? Download free ebooks at bookboon.com 9 Accounting Cycle Exercises I Problem 2: Worksheet TOP CORPORATION Balance Sheet December 31, 20XX 20X4 20X3 20X2 ? ? Assets Cash $ 25,000 Accounts receivable 32,500 25,000 Land 90,000 90,000 Total assets ? 90,000 $ 144,500 ? ? Liabilities Interest payable ? Loan payable $ 5,000 500 $ ? Total liabilities $ 1,000 ? 5,500 $ 15,500 Stockholders’ equity Capital stock ? Retained earnings ? ? $114,000 15,000 Total stockholders’ equity ? ? 119,000 $ 149,500 Total Liabilities and equity ? ? $ 150,000 Worksheet 2 TOP CORPORATION Income Statement For the Years Ending December 31, 20XX 20X4 20X3 20X2 Revenues Services to customers $ 100,000 ? $ 50,000 Expenses Wages Interest Net income $ 58,500 ? 1,500 1,500 ? ? 2,500 ? $ 20,000 ? ? ? Download free ebooks at bookboon.com 10 Accounting Cycle Exercises I Problem 2: Worksheet TOP CORPORATION Statement of Retained Earnings For the Years Ending December 31, 20XX 20X4 Beginning retained earnings ? Plus: Net income 20X3 ? 20X2 ? $ 20,000 ? - ? Ending retained earnings $ ? $ 12,500 15,000 Less: Dividends ? ? 30,000 ? ? TOP CORPORATION Balance Sheet December 31, 20XX 20X4 20X3 ? 20X2 ? Assets Cash $ 25,000 Accounts receivable 32,500 25,000 Land 90,000 90,000 Total assets ? 90,000 $ 144,500 ? ? Liabilities Interest payable ? Loan payable $ 5,000 Total liabilities 500 $ ? $ 1,000 ? 5,500 $ 15,500 ? Stockholders’ equity Capital stock ? Retained earnings ? Total stockholders’ equity Total Liabilities and equity ? $114,000 15,000 ? ? ? 119,000 $ 149,500 ? $ 150,000 Download free ebooks at bookboon.com 11 Accounting Cycle Exercises I Problem 2: Solution Solution 2 TOP CORPORATION Income Statement For the Years Ending December 31, 20XX 20X4 20X3 20X2 Revenues Services to customers $ 100,000 $ 80,000 $ 50,000 Expenses Wages Interest $ 68,500 1,500 Net income $ 58,500 70,000 $ 30,000 1,500 35,000 60,000 $ 20,000 2,500 37,500 $ 12,500 Please click the advert See the light! The sooner you realize we are right, the sooner your life will get better! A bit over the top? Yes we know! We are just that sure that we can make your media activities more effective. Get “Bookboon’s Free Media Advice” Email kbm@bookboon.com Download free ebooks at bookboon.com 12 Accounting Cycle Exercises I Problem 2: Solution TOP CORPORATION Statement of Retained Earnings For the Years Ending December 31, 20XX 20X4 Beginning retained earnings 20X3 $ 15,000 Plus: Net income $ 20X2 5,000 $ - 30,000 $ 25,000 $ 12,500 15,000 10,000 7,500 $ 30,000 Ending retained earnings $ 12,500 $ 45,000 Less: Dividends 20,000 $ 15,000 $ 5,000 TOP CORPORATION Balance Sheet December 31, 20XX 20X4 20X3 20X2 Assets Cash $ 27,000 $ 29,500 $ 25,000 Accounts receivable 32,500 25,000 35,000 Land 90,000 90,000 90,000 $ 149,500 $ 144,500 $ 150,000 Total assets Liabilities Interest payable Loan payable $ 500 $ 5,000 Total liabilities 500 $ 15,000 $ 5,500 1,000 30,000 $ 15,500 $ 31,000 Stockholders’ equity Capital stock Retained earnings Total stockholders’ equity Total Liabilities and equity $114,000 $114,000 $114,000 30,000 15,000 5,000 144,000 129,000 119,000 $ 149,500 $ 144,500 $ 150,000 Download free ebooks at bookboon.com 13 Accounting Cycle Exercises I Problem 3: Worksheet Problem 3 Prepare Bologna’s income statement, statement of retained earnings, and balance sheet for the year ending December 31, 20X5. The following information is all that is available. Be sure to prepare proper headings and dates on each financial statement. Capital stock $102,500 Wage expense 92,500 Revenue 225,000 Cash 22,500 Utilities expense 15,000 Beginning retained earnings 27,500 Rent expense 25,000 Accounts payable 10,000 Equipment 200,000 Dividends 12,500 Accounts receivable 47,500 Notes payable 50,000 Worksheet 3 BOLOGNA COMPANY Income Statement Revenues Services to customers Expenses BOLOGNA COMPANY Ending retained earnings Download free ebooks at bookboon.com 14 Accounting Cycle Exercises I Problem 3: Worksheet Assets Total assets Liabilities Total liabilities Stockholders’ equity Total stockholders’ equity Please click the advert Total liabilities and equity GOT-THE-ENERGY-TO-LEAD.COM We believe that energy suppliers should be renewable, too. We are therefore...
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