Carlos Ramirez and Camila Garza organized New World Book
Store as a corporation; each contributed $71,900 cash to start the business and
received 5,900 shares of common stock. The store completed its first year of
operations on December 31, current year. On that date, the following financial
items for the year were determined: December 31, current year, cash on hand and
in the bank, $70,050; December 31, current year, amounts due from customers
from sales of books, $43,000; unused portion of store and office equipment,
$79,500; December 31, current year, amounts owed to publishers for books
purchased, $13,800; one-year note payable to a local bank for $3,500, with
interest due of $210. No dividends were declared or paid to the stockholders
during the year.
Required:
1. Complete the following balance sheet as of the end of
current year. Some information has been given below.
2. What was the amount of net income for the year? (Hint:
Use the retained earnings equation [Beginning Retained Earnings + Net Income −
Dividends = Ending Retained Earnings] to solve for net income.)
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