Question

October 1, Keisha King organized Real Answers, a new consulting firm; on October 3, the owner contributed $76,470 cash. On October 31, the company’s records show the following items and amounts.Cash $ 2,000 Cash dividends $ 3,360Accounts receivable 17,000 Consulting fees earned 19,000Office supplies 4,250 Rent expense 3,420Land 36,000 Salaries expense 7,600Office equipment 28,000 Telephone expense 660Accounts payable 7,500 Miscellaneous expenses 680Common stock 76,470 Prepare a balance sheet. Retained earnings are 5060.

Answer 1

Answer and Explanation:

The preparation of the balance sheet is presented below:

                                                      Keisha King

                                                   Balance sheet

Assets

Current Assets

Cash $2,000

Accounts receivable $17,000

Office supplies $4,250

Total current assets $23,250

Land $36,000

Office equipment $28,000

Total fixed assets $64,000

Total assets $87,250

Liabilities  

Current liabilities  

Accounts payable $7,500

Total current liabilities $7,500

Total liabilities $7,500

Equity

Common stock $76,470

Retained earning $3,280 (Working note)

Total equity $79,750

Total liabilities and owners equity $87,250

Working note:

As we know that

Retained earning = Sales - rent expense - salary expense - telephone expense - miscellaneous expense - dividend paid

= $19,000 - $3,420 - $7,600 - $660 - $680  - $3,360

= $3,280