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30 November, 20:47

In addition, the balance of common stock at the beginning of the year was $650,000, and the balance of retained earnings was $50,000. During the year, the company issued additional shares of common stock for $34,000 and paid dividends of $28,000. In addition, the company reported balances for the following assets and liabilities on December 31. Assets Liabilities Cash $ 54,400 Accounts payable $ 15,600 Supplies 12,700 Utilities payable 6,000 Prepaid rent 33,000 Salaries payable 5,300 Land 290,000 Notes payable 33,000 Required: 1. Prepare a statement of stockholders' equity. 2. Prepare a balance sheet.

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  1. 30 November, 21:30
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    Assets Liabilies

    Cash 54,400 Account Payable 15,600

    Supplies 12,700 Salaries Payable 5,300

    Prepaid Rent 33,000 Utilities payable 6,000

    Total Current Assets 100,100 Note Payable 33,000

    Land 290,000 Total liabilities 59,900

    Common Stock 684,000

    RE - 353,800 (A)

    Total Equity 330,200

    Total Asets 390,100 Liab + SE 390,100

    Common Stock Retained Earings Total

    Balance Jan 1 650,000 50,000 700,000

    Net Loss - 375,800 (B) - 375,800

    Dividends - 28,000 - 28,000

    Stock issued 34,000 34,000

    Balance, Dec 31 684,000 - 353,800 330,200

    Explanation:

    (A)

    We calcualte RE ending balance using the accounting equation:

    Assets = Liabilities + Equity

    390,100 = 59,900 + Common stock + RE

    390,100 = 59,900 + (650,000 + 34,000) + RE

    RE = 390,000 - 59,900 - 684,000

    RE = - 353,800

    Then we construct the Stockholders equity statement

    (B)

    net loss will be:

    begining RE + income + dividend = ending RE

    50,000 + income - 28,000 = - 353,800

    income = - 353,800 + 28,000 - 50,000 = - 375,800 net loss as it is negative.
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