QUESTION 2 Sara Company was established at the beginning of 2020 when Sara paid a total...

Transcribed Image Text:

QUESTION 2 Sara Company was established at the beginning of 2020 when Sara paid a total of $20,000 to purchase Sara's common stock. By December 31, 2020, Sara had account receivable of $20,000, supplies of $4000, inventory of $15,600, and notes payable of $1000. Revenues for the year were $81,200. Of this amount, customers paid 4,550 in cash. Sara paid dividends of $25,00 to its stockholders during 2020. Requirements: 1. What is the amount of Sara's total assets as of December 31, 2020? (Rubrics: 1 mark for the correct account balances and answer- Total 1 mark) 2. Identify the accounts listed above that are Current Assets. (Rubrics: 0.25 mark for the correct account identification- Total 0.5 mark) 3. a. What is the amount of Sara's ending retained eamings as of December 31, 2020? (Hint: use the modified accounting equation) (Rubrics: 0.5 mark for the correct calculation and answer – Total 2 marks) b. Use your findings in part a to calculate Sara's Net Income. (Hint: use the retained earnings equation) (Rubrics: 0.5 mark for the correct calculation and answer – Total 1.5 mark) 4. Prepare a statement of stockholders' equity for the year ended December 31, 2020. (Rubrics: 0.25 mark for each correct element and correct form of statement of stockholders' equity and heading, 0.5 mark for the correct calculations of totals. Total = 3 marks) %3D QUESTION 2 Sara Company was established at the beginning of 2020 when Sara paid a total of $20,000 to purchase Sara's common stock. By December 31, 2020, Sara had account receivable of $20,000, supplies of $4000, inventory of $15,600, and notes payable of $1000. Revenues for the year were $81,200. Of this amount, customers paid 4,550 in cash. Sara paid dividends of $25,00 to its stockholders during 2020. Requirements: 1. What is the amount of Sara's total assets as of December 31, 2020? (Rubrics: 1 mark for the correct account balances and answer- Total 1 mark) 2. Identify the accounts listed above that are Current Assets. (Rubrics: 0.25 mark for the correct account identification- Total 0.5 mark) 3. a. What is the amount of Sara's ending retained eamings as of December 31, 2020? (Hint: use the modified accounting equation) (Rubrics: 0.5 mark for the correct calculation and answer – Total 2 marks) b. Use your findings in part a to calculate Sara's Net Income. (Hint: use the retained earnings equation) (Rubrics: 0.5 mark for the correct calculation and answer – Total 1.5 mark) 4. Prepare a statement of stockholders' equity for the year ended December 31, 2020. (Rubrics: 0.25 mark for each correct element and correct form of statement of stockholders' equity and heading, 0.5 mark for the correct calculations of totals. Total = 3 marks) %3D

Answer rating: 100% (QA)

1 Amount of total Assets on December 31 2020 S No Particulars 1 Account Receivable Amount 2000000 2 ... View the full answer