hello! I am having trouble grasping this subject. I think I have part of it corr
ID: 2373071 • Letter: H
Question
hello!I am having trouble grasping this subject. I think I have part of it correct.
"As of December 31, 2010, Thomas Company had total assets of $156,000, total liabilities of $85,600, and common stock of $52,400. During 2011 Thomas earned $36,000 of cash revenue, paid $20,000 for cash expenses, and paid a $2,000 cash dividend to the stockholders.
Required:
(a) Determine the amount of retained earnings as of December 31, 2010, after closing. Retained earnings $ 18,000
(b) Determine the amount of net income earned in 2011. Net income $ _______
(c) Determine the amount of retained earnings as of December 31, 2011, after closing. Retained earnings $ _________
Any help would be appreciated! thank you!
Explanation / Answer
As of December 31, 2010, Thomas Company had total assets of $156,000, total liabilities of $85,600, and common stock of $52,400. During 2011 Thomas earned $36,000 of cash revenue, paid $20,000 for cash expenses, and paid a $2,000 cash dividend to the stockholders.
(a) Determine the amount of retained earnings as of December 31, 2010, after closing. Retained earnings
$18,000 ($156,000 - $85,600 - $52,400)
(b) Determine the amount of net income earned in 2011.
Net income $16,000 ($36,000 - $20,000)
(c) Determine the amount of retained earnings as of December 31, 2011, after closing.
Retained earnings $32,000 ($18,000 + $16,000 - $2,000)
Check
Total Assets as on December 31, 2010 $156,000
Cash from Current year's operation
($36,000 - $20,000 - $2,000) $14,000
Total Assets $170,000
Total Liabilities as on December 31, 2010 $85,600
Shareholders' equity
Common Stock $52,400
Retained Earnings $32,000 $84,400
Total Liabilities & Shareholders' Equity $170,000
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