As of December 31, Year 1, Flowers Company had total assets of $80,000, total liabilities of $24,000, and common stock of $40,000. The company’s Year 1 income statement contained revenue of $14,000 and expenses of $8,000. The Year 1 statement of changes in stockholders’ equity stated that $900 of dividends were paid to investors.

Required:
a. Determine the before-closing balance in the Retained Earnings account on December 31, Year 1.
b. Determine the after-closing balance in the Retained Earnings account on December 31, Year 1.
c. Determine the before-closing balances in the Revenue, Expense, and Dividend accounts on December 31, Year 1.
d. Determine the after-closing balances in the Revenue, Expense, and Dividend accounts on December 31, Year 1.
e. On January 1, Year 2, Flowers Company raised $19,000 by issuing additional common stock. Immediately after the additional capital was raised, Flowers reported total stockholders' equity of $75,000. Are the stockholders of Flowers in a better financial position than they were on December 31, Year 1?

Answer rating: 100% (QA)

a The beforeclosing balance in the Retained Earnings account can be calculated as follows BeforeClos... View the full answer