uestion 1 Below is the balance sheet of ABC Company at the end of 2010: Assets L
ID: 2814870 • Letter: U
Question
uestion 1
Below is the balance sheet of ABC
Company
at the end of 2010:
Assets
Liab. & Owners Equity
Cash
$11,300
Accounts payable
$500
Account receivable
$1,000
Long
-
term debt
$8,000
Inventory
6,600
Common stock (par value = $2)
$4,000
Additional paid
-
in capital
$5,000
Retained earnings
$1,400
Total Assets
$18,900
Liab. & Owners Equity
$18,900
Its net income for year 2011 is $569. The dividend payout ratio
(dividends/Net Income) is 28%
.
Also,
200 new shares of
common stock were issued
and sold for $1400
in 2011
.
The 2011
ending balance sheet is partially given below.
Assets
Liab. & Owners Equity
Cash
$8,434
Accounts payable
$1,100
Account
receivable
$2,460
Deferred taxes
$306
Inventory
$5,972
Long
-
term debt
$23,000
Common stock (par value = $2)
?
PP&E
$20,000
Additional paid
-
in capital
?
Accum depreciation
($250)
Retained earnings
?
Total Assets
$42,588
Liab. & Owners
Equity
$36,616
(a) Please calculate common stock, additional paid
-
in capital, and retained earnings for 2011
ending balance sheet.
(Round up the numbers no decimal points)
Explanation / Answer
1. Common Stock Balance as on 2011 = Opening Balance + Par Value of Stock Issued
Common Stock Balance as on 2011 = $4000 + 200 * $2
Common Stock Balance as on 2011 = $4400
2. Additional paid - in capital BAlance as on 2011 = Opening Balance + Additional paid - in capital of Stock Issued
Additional paid - in capital BAlance as on 2011 = $5000 + $1400 - $400
Additional paid - in capital BAlance as on 2011 = $6000
3. Retained Earnings Balance as on 2011 = Opening Balance + Net Income - Dividends
Retained Earnings Balance as on 2011 = $1400 + $569 - $569 * 28%
Retained Earnings Balance as on 2011 = $1810
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