Question

uestion 1 Below is the balance sheet of ABC Company at the end of 2010: Assets...

uestion 1

Below is the balance sheet of ABC

Company

at the end of 2010:

Assets

Liab. & Owners Equity

Cash

$11,300

Accounts payable

$500

Account receivable

$1,000

Long

-

term debt

$8,000

Inventory

6,600

Common stock (par value = $2)

$4,000

Additional paid

-

in capital

$5,000

Retained earnings

$1,400

Total Assets

$18,900

Liab. & Owners Equity

$18,900

Its net income for year 2011 is $569. The dividend payout ratio

(dividends/Net Income) is 28%

.

Also,

200 new shares of

common stock were issued

and sold for $1400

in 2011

.

The 2011

ending balance sheet is partially given below.

Assets

Liab. & Owners Equity

Cash

$8,434

Accounts payable

$1,100

Account

receivable

$2,460

Deferred taxes

$306

Inventory

$5,972

Long

-

term debt

$23,000

Common stock (par value = $2)

?

PP&E

$20,000

Additional paid

-

in capital

?

Accum depreciation

($250)

Retained earnings

?

Total Assets

$42,588

Liab. & Owners

Equity

$36,616

(a) Please calculate common stock, additional paid

-

in capital, and retained earnings for 2011

ending balance sheet.

(Round up the numbers no decimal points)

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Homework Answers

Answer #1

1. Common Stock Balance as on 2011 = Opening Balance + Par Value of Stock Issued

Common Stock Balance as on 2011 = $4000 + 200 * $2

Common Stock Balance as on 2011 = $4400

2. Additional paid - in capital BAlance as on 2011 = Opening Balance + Additional paid - in capital of Stock Issued

Additional paid - in capital BAlance as on 2011 = $5000 + $1400 - $400

Additional paid - in capital BAlance as on 2011 = $6000

3. Retained Earnings Balance as on 2011 = Opening Balance + Net Income - Dividends

Retained Earnings Balance as on 2011 = $1400 + $569 - $569 * 28%

Retained Earnings Balance as on 2011 = $1810

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