Reference no: EM132421237
1. Bennett Griffin and Chula Garza organized Cole Valley Book Store as a corporation; each contributed $80,000 cash to start the business and received 4,000 shares of common stock. The store completed its first year of operations on December 31, current year. On that date, the following financial items for the year were determined: December 31, current year, cash on hand and in the bank, $75,600; December 31, current year, amounts due from customers from sales of books, $39,000; unused portion of store and office equipment, $73,000; December 31, current year, amounts owed to publishers for books purchased, $12,000; one-year note payable to a local bank for $3,000. No dividends were declared or paid to the stockholders during the year.
a. Complete the following balance sheet as of the end of current year.
ASSETS
LIABILITIES
Cash
Accounts payable
Accounts receivable
Note payable
Store and office equipment
Interest payable
Total liabilities
STOCKHOLDERS' EQUITY
Common stock
Retained earnings
Total stockholders' equity
Total assets
Total liabilities and equity
b. What was the amount of net income for the year? (Hint: Use the retained earnings equation [Beginning Retained Earnings + Net Income - Dividends = Ending Retained Earnings] to solve for net income.)