As of December 31, 2013, Post Company had total cash $156,000, notes payable of
ID: 2363010 • Letter: A
Question
As of December 31, 2013, Post Company had total cash $156,000, notes payable of $85,000, and common stock of 52,000. During 2014, Post earned 36,000 of cash revenue, paid $20,000 for cash expenses, and paid a $3,000 cash dividend to stockholders a.) determine the amount of retained earnings of December 31, 2013 b.) Create an account equation and record the begeinning account balances under the appropriate elements. c.) record the revenue, expenses, and dividend events under the appropriate elements of the accounting equation created in Requirement b. d.) prove the equality of the accounting equation as of December 31, 2014. e.) identify the beginning and ending balances in the cash and common stock accounts. Explain why the beginning and ending balances in the cash are different, but the beginning and ending balances in the common stock account remain the same.Explanation / Answer
Total assets mentioned = $156000
Total liabilities and equity = $85000 + $52000 = $137000
So either a liability or an equity of $19000 is missing.
a) Retained earning = $36000 - $20000 - $3000 = $13000
b) Cash = NOtes Payable + Common Stock + missing liability or equity.
c) Revenue...Cr = $36000
Cash...Dr = $36000
Expense ... Dr = 20000
Cash... Cr = $20000
Dividends... Dr =$3000
Cash.. Cr = $3000
e) Cash = $156000 + $13000 = $169000
Notes =$85000
Common Stock = $52000
Retained Earnings = $13000
Missing liability or earning = $19000
Total = $169000
f) Common stock was not issued or bought back. So its value remained same
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