Question

As of December 31, 2013, Blue Hen Company had total assets of $100,000, total liabilities of $30,000, and common stock of $50,000.

Required
a. Determine the amount of retained earnings as of December 31, 2013, after closing.
b. Explain the difference between common stock and retained earnings.
c. On January 1, 2014, Blue Hen raised $40,000 by issuing additional common stock. Immediately after the additional capital was raised, Blue Hen reported total equity of $110,000. Are the stockholders of Blue Hen in a better financial position than they were on December 31, 2013?



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  • CreatedOctober 12, 2013
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