NAPOLEAN CORPORATIONStatement of Stockholders' EquityFor Year Ended December 31, 2016CommonStockRetainedarningsTotalBalance, January 1, 2016Add: Net Income for 20162,4002,400Add: Issuance of Common Stock6,0006,000(900)7,5006,000Less: Dividends paid(enter as a negative)(900)(900)Balance, December 31, 20165,100 $7,500
Napolean Corporation started business on January 1, 2016. The following information was compiled by Napolean’s accountant on December 31, 2016:
Sales Revenue $6,000 Equipment, net $4,500
Expenses 3,600 Building, net 12,000
Dividends 900 Accounts Payable 1,200
Cash 450 Notes Payable 9,900
Accounts Receivable 750 Common Stock 6,000
Inventory 900 Retained Earnings ?
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NAPOLEAN CORPORATION Statement of Stockholders' Equity For Year Ended December 31, 2016 Common Stock Retained arnings Total Balance, January 1, 2016 Add: Net Income for 2016 2,400 2,400 Add: Issuance of Common Stock 6,000 6,000 (900) 7,500 6,000 Less: Dividends paid (enter as a negative) (900) (900) Balance, December 31, 2016 5,100 $ 7,500
As a first step, the net income earned during the year shall be computed by deducting the expenses from the revenues of the business.
Net Income = Revenues - Expenses = 6000 -3600 = $ 2400.
As the business is in the forst year of operation, the begining balance of Retained earnings is Nil.
Therefore, to compute the ending Balance of Retained earnings, the dividend paid shall be d...
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