On November 1 of the current year, Rob Elliot invested $30,500.00 of his cash to

Question

On November 1 of the current year, Rob Elliot invested $30,500.00 of his cash to form a corporation, GGE Enterprises Inc., in exchange for shares of common stock. No other common stock was issued during November or December. After a very successful first month of operations, the retained earnings as of November 30 were reported at $5,000.00. After all transactions have been entered into the accounting equation for the month of December, the ending balances for selected items on December 31 follow. On that date, the financial statements were prepared. The balance sheet reported total assets of $54,650.00 and total stockholders' equity of $39,785.00 Rent Supplies Utilities Miscellaneous Accounts Common Retained Payable Fees Wages Expense Cash Supplies Land Dividends Expense xpese Expense $4,675.00 $1,250.00 Stock Earnings Earned ?$7,00.0 $16,000.00 $5,000.00 5,500.00 $27,750.00 6,375.00 $415.00 Review the following questions. Place an·X' in the box to indicate which financial statement(s) report the desired information. Enter the amount reported on the financial statement. Balance Income Retained Earnings Sheet Statement Statement 1. What is the amount reported for total liabilities and stockholders' equity on December 317 2. What is the retained earnings amount reported on December 31? 3. How much does GGE Enterprises Inc, owe to its creditors? 4. How much cash is being held by GGE Enterprises Inc.? 5. By what amount did retained earnings increase or decrease during the period? 6. What is the amount of profit or loss during December? 7. What were the total expenses for December? 8. How much was paid for rent? $54,650.00 v

Explanation / Answer

Note: Under item 5, during the period is construed to mean during December and hence increase in retained earnings = Ending balance of December $9285 - Ending balance of November $5000 = $4285.

Workings:

Balance Sheet Income Statement Retained Earnings Statement Amount $ 1 What is the amount reported for total liabilities and stockholders' equity on December 31? X 54650 2 What is the retained earnings amount reported on December 31? X 9285 3 How much does GGE Enterprises Inc. owe to its creditors? X 14865 4 How much cash is being held by GGE Enterprises Inc.? X 31050 5 By what amount did retained earnings increase or decrease during the period? X 4285 6 What is the amount of profit or loss during December? X 9785 7 What were the total expenses for December? X 17965 8 How much was paid for rent? X 5250

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