Question

Carlos Ramirez and Camila Garza organized New World Book Store as a corporation; each contributed $71,900 cash to start the business and received 5,700 shares of common stock. The store completed its first year of operations on December 31, 2014.On that date, the following financial items for the year were determined: December 31, 2014, cash on hand and in the bank, $69,150; December 31, 2014, amounts due from customers from sales of books, $39,000; unused portion of store and office equipment, $79,500; December 31, 2014, amounts owed to publishers for books purchased, $12,200; one-year note payable to a local bank for $3,700, with interest due of $180.No dividends were declared or paid to the stockholders during the year.Prepare the balance sheet as of the end of 2014.

Answer 1

Answer:

                                       New World Book Shore

                         Balance Sheet as at December 31, 2014

Assets                                                                       $                   $

Cash & Bank                                                                              69,150

Debtors                                                                                     39,000

Stocks                                                                                        79,500

                                                                                                   187,650

Liabilities

Creditors                                                            12,200

Notes Payable                                                    3,880

                                                                                                     16,080

Common Stock                                                                          142,000

Retained earnings                                                                       29,570

                                                                                                    187,650

Explanation:

Common stock =($71,000*2) = $142,000.

Share holdings=11,400 common Shares.

Retained earnings=Total Assets-common stock-Liabilities

Retained earnings=$187,650-$158,080=$29,570.