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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Problem 1-64A Stockholders' Equity Relationships

Data from the financial statements of four different companies are presented in separate columns in the table below. Each column has one or more data items missing.

Chapter 1, Problem 64APSA, Problem 1-64A Stockholders' Equity Relationships Data from the financial statements of four

Required:

Use your understanding of the relationships among the financial statement items to determine the missing values (a-o).

To determine

Concept Introduction:

Financial statements: Financial statements are prepared to summaries the account at the end of the period. The statements prepared are Income statement, Balance sheet, Statement of owner’s equity and Cash flows statements.

Accounting equation:

Accounting equation represents the mathematical relationship between assets, liabilities and equity. According to this equation, assets are equal to the sum of liabilities and equity. The formal for basic accounting equation is as follows:

  Assets = Liabilities + Equity

Statement of Retained earnings:

Items reported on a retained earnings statement are explained as follows:

  • Beginning Balance of Retained earnings is the ending balance of the retained earnings of the previous year
  • Net Income or Net loss is the amount of net income earned or net loss incurred for the year
  • Dividends Paid are taken for the year
  • Ending Balance of Retained earnings is calculated as follows:

Ending Balance of Retained earnings = Beginning Balance of Retained earnings + Net Income − Net income − Dividends Paid

To Calculate:

The missing amounts.

Explanation

The missing amounts are calculated as follows:

    Berko Manning Lucas Corey
    Equity, 12/31/2018:
    Common Stock $50,000 $ 35,000 $40,000 $ 15,000
    (66400-26400)
    Retained earnings $12,100 $ 9,300 $ 26,400 $ 21,900
    (44300-35000)
    Total Equity $ 62,100 $ 44,300 $ 66,400 $ 36,900
    (50000+12100)
    Net Income (loss) for 2019 $ 7,000 $ (1,800) $ 6,000 $ 7,100
    (27600+1400-21900)
    Dividends during 2019 $ 2,000 $- $ 2,900 $ 1,400

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