Completing a Balance Sheet and Inferring NetIncome Terry Lloyd and Joan Lopez or

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Completing a Balance Sheet and Inferring NetIncome

Terry Lloyd and Joan Lopez organized Read More Store as acorporation; each contributed $50,000 cash to start the businessand received 4,000 shares of common stock. The store completed itsfirst year of operations on December 31, 2006. On that date, thefollowing financial items for the year were determined: December31, 2006, cash on hand and in the bank, $48,900; December 31, 2006,amounts due from customers from sales of books, $25,000; unusedportion of store and office equipment, $49,000; December 31, 2006,amounts owed to publishers for books purchased, $7,000; one-yearnote payable to a local bank for $3,000. No dividends were declaredor paid to the stockholders during the year.

Required:

Explanation / Answer

Assets Liabilities Cash $48,900 Accounts Payable $7,000 Accounts Receivables $25,000 Note Payable $3,000 Store & Equipments $49,000 Interest Payable $120 Total Liabilities Stockholder's Equity Contributed capital $100,000 Retained Earnings $12,780 Total Liabilities & Total Assets $122,900 Stockholders' equity $122,900

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