As of December 31st, year 1, Moss Company had total cash of $165,000, notes paya
ID: 2332920 • Letter: A
Question
As of December 31st, year 1, Moss Company had total cash of $165,000, notes payable of $86,500, and common stock of $53,300. During year 2, Moss earned $45,000 of cash revenue, paid $24,500 for cash expenses, and paid a $3,900 cash dividend to the stockholders.Required a. Determine the amount of retained earnings as of December 31, Year 1 b.&c.Create an a ng equation and record the beginning account balances, revenue, expense, and dividend events under the appropriate elements of the accounting equation. (Enter any decreases to account belances with a minus sign.) MOSS COMPANY Effect of Year 2 Transactions on the Accounting Equation Event Common Retained Notes Payable Cash Beginning balance 1. Earned revenue 2. Paid expenses Ending balance 1 of 2 Next> 0
Explanation / Answer
1) Solution: 25,200
Working:
Assets
Liabilities
Stockholder's equity
Cash
=
Notes payable
+
Common stock
+
Retained earnings
165,000
86,500
53,300
25,200
Retained earnings = 165,000 - 86,500 - 53,300 = 25,200
2)
Event
Assets
Liabilities
Stockholder's equity
Cash
=
Notes payable
+
Common stock
+
Retained earnings
Beginning balance
165,000
86,500
53,300
25,200
1) Earned Revenue
45,000
45,000
2) Paid expenses
-24,500
-24,500
3) Paid dividend
-3,900
-3,900
Ending balance
181,600
=
86,500
+
53,300
+
41,800
Assets
Liabilities
Stockholder's equity
Cash
=
Notes payable
+
Common stock
+
Retained earnings
165,000
86,500
53,300
25,200
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