The following selected accounts and account balances were taken from the records of Wages Company. Except as
Question:
Cash received from common stock issued during 2016 .... $4,500
Cash ........................ 10,500
Revenue ....................... 18,000
Salary expense .................... 13,000
Cash flow from operating activities ........... 4,500
Notes payable .................... 6,000
Utility expense .................... 1,800
Dividends ....................... 1,000
Cash flow from financing activities ............ 5,000
Rent expense .................... 1,600
Land ......................... 25,000
Retained earnings, January 1, 2016 ............. 19,700
Common stock, December 31, 2016 ............ 20,000
Required
a. Prepare the income statement Wages would include in its 2016 annual report.
b. Identify the accounts that should be closed to the Retained Earnings account.
c. Determine the Retained Earnings account balance at December 31, 2016. Identify the reasons for the difference between net income and the ending balance in Retained Earnings.
d. What are the balances in the Revenue, Expense, and Dividend accounts on January 1, 2017? Explain.
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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Related Book For
Fundamental Financial Accounting Concepts
ISBN: 978-0078025907
9th edition
Authors: Thomas Edmonds, Christopher Edmonds
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