3 Financial Accounting

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Business Finance

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Explanation & Answer

a) retained earnings as of December 31, 2013 will be 156000 - 85600 - 52400 = $ 18000

To find retained earnings, only simplify the equation that assets = liabilites + equity

b) Assets = liabilites + Capital + Retained Earning

    Cash = notes payable + common stock

C) Cash + cash revenue - cash expenses - cash dividend = notes payable (liabilites) + common stock + cash revenue ( that is postive in Retained Earning, or can be said to be in categoty of equity also if you professor does not wish to include captial and retained earning as seperate) - cash expenses (Retained Earning) -  cash dividends (Retained Earning)

D) Cash opening balance is 156000, but closing at dec, 2014 is ( 156000 +36000 -20000 -3000 ) = 169000

Common stock account will remain the same, at 52400 as no shares were sold or bought during the year, thus no acitvity regarding that. Cash account increased because there was activitiy in selling, and expenses incurred to sale the merchandise, and paying profit based upon the share in form of cash to shareholders.



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