The following information was obtained from the records of Shae, Inc.: s 112 500
ID: 2604462 • Letter: T
Question
The following information was obtained from the records of Shae, Inc.: s 112 500 Notes payable (long-term) Sales Buildings and equipment Selling. general, and administrative expenses Accounts receivable Common stock (34,000 shares) Income tax expense Cash Retained earnings, 1/1/16 Accrued liabilities Cost of goods sold 37 500 26.250 7.500 225.000 01,250 Interest expense Accounts payable Dividends declared and paid during 2016 1,638 Except as otherwise indicated, assume that all balance sheet items reflect account balances at December 31, 2016, and that all income statement items reflect activities that occurred during the year ended December 31, 2016. There were no changes in paid-in capital during the year Required: a. Prepare an income statement and statement of changes in stockholders' equity for the year ended December 31, 2016, and a balance sheet at December 31, 2016, for Shae, Inc. Based on the financial statements that you have prepared for part a, answer the questions in parts b-e of goods sold proft Paid-in capitalExplanation / Answer
Solution:
Part 1 --- Income Statement ---- is prepared correct in the question.
Part 2 --- Correct Statement of Change in Stockholders’ Equity is as follows:
SHAE INC.
Statement of Change in Stockholders' Equity
For the Year Ended December 31, 2016
Paid in Capital:
Common Stock
$170,000
Retained Earnings
Beginning balance (given as on 1/1/16)
$104,550
Net Income
$61,250
Less: Dividends declared and paid
-$11,638
Ending balance
$154,162
Total Stockholders' Equity
$324,162
Part 3 --- Balance Sheet
SHAE INC.
Balance Sheet
December 31, 2016
Assets:
Cash
$201,662
Accounts Receivable
$56,250
Merchandise Inventory
$112,500
Total Current Assets
$370,412
Building and Equipment
$225,000
Less: Accumulated Depreciation
-$101,250
$123,750
Total Assets
$494,162
Liabilities
Accrued Liabilities
$7,500
Accounts Payable
$37,500
Notes Payable (long term)
$125,000
Total Liabilities
$170,000
Stockholders' Equity
Common stock
$170,000
Retained Earnings
$154,162
Total Stockholders' Equity
$324,162
Total Liabilities and Stockholders' Equity
$494,162
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SHAE INC.
Statement of Change in Stockholders' Equity
For the Year Ended December 31, 2016
Paid in Capital:
Common Stock
$170,000
Retained Earnings
Beginning balance (given as on 1/1/16)
$104,550
Net Income
$61,250
Less: Dividends declared and paid
-$11,638
Ending balance
$154,162
Total Stockholders' Equity
$324,162
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