Answer:
Common Stock = $29,000
Retained Earnings = $32,100
Explanation:
Donovan Inc.
Balance Sheet
As of December 31, 20YY
Assets
Cash $ 12,100
Inventory 15,100
Buildings 39,900
Total assets $67,100
Liabilities and Stockholders' Equity
Accounts payable $ 6,000
Stockholders' Equity
Common Stock $29,000 (Balancing, see the notes)
Retained Earnings $32,100 (Statement of retained earnings)
Total liabilities and stockholders' equity $67,100
Notes: Common stock = Total L&OE - Liabilities - Retained earnings
Common stock = $67,100 - 6,000 - 32,100 = $29,000
To determine common stock, we need to find the retained earnings. The following statement of owners' equity will give that data.
To determine the net income, we need to check the retained earnings statement.
Donovan Inc.
Statement of owners' equity
For the year ended, December 31, 20YY
Beginning retained earnings $17,100
Add; Net Income 19,780 (Note: 1)
Less: Dividends (4,780)
Ending retained earnings $32,100
Note (1): Ending R.E = Begining R.E + Net Income - Dividends
$32,100 = $17,100 + NI - $4,780
NI = $32,100 - 12,320
Net Income = $19,780
