Accounting: Tools for Business Decision Making, 5th Edition

Published by Wiley
ISBN 10: 1118128168
ISBN 13: 978-1-11812-816-9

Chapter 1 - Introduction to Financial Statements - Exercises: E1-9

Answer

1) $30,000; 2) $25,000; 3) $20,000; 4) $55,000; 5) $20,000; 6) $20,000.

Work Step by Step

1) Retained earnings on the retained statement is $25,000 Common stock = X 5,000 + X + 25,000(calculated in first step) = 60,000 30,000 + X = 60,000 X = 30,000 Common Stock = $30,000 2) Retained earnings on the retained statement is $25,000. Retained earnings on the balance sheet are the same as retained earnings from the retained earnings statement. 3) On the retained earnings statement: Net Income = X $10,000 + X - $5,000 = $25,000 $5,000 + X = $25,000 Net Income(X) = $20,000 4) Cost of goods sold = X $85,000 - X - $10,000 = $20,000 ( Net Income calculated in previous step) $75,000 - X = $20,000 $75,000 = $20,000 + X $55,000 = X Cost of goods sold = $55,000 5) On the retained earnings statement: Net Income = X $10,000 + X - $5,000 = $25,000 $5,000 + X = $25,000 X = $20,000 Net Income = $20,000 6) On the retained earnings statement: Net Income = X $10,000 + X - $5,000 = $25,000 $5,000 + X = $25,000 X = $20,000 Net Income = $20,000
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