Question

On November 1 of the current year, Rob Elliot invested $29,250.00 of his cash to form a corporation, GGE Enterprises Inc., in exchange for shares of common stock. No other common stock was issued during November or December. After a very successful first month of operations, the retained earnings as of November 30 were reported at $5,000.00. After all transactions have been entered into the accounting equation for the month of December, the ending balances for selected items on December 31 follow. On that date, the financial statements were prepared. The balance sheet reported total assets of $54,900.00 and total stockholders' equity of $37,970.00.

Cash=?

Supplies=8350.00

Land=15,500

Accounts payable=?

Common stock=?

retained earnings= 5,000.00

dividends= 5,750.00

fees earned= 27,500.00

wage expense= 6,500.00

rent expense= ?

supplies expense= 4.650.00

utilities expense= 1,295.00

Review the following questions. Place an ‘X’ in the box to indicate which financial statement(s) report the desired information. Enter the amount reported on the financial statement.

1. What is the amount reported for total liabilities and stockholders’ equity on December 31?
2. What is the retained earnings amount reported on December 31?
3. How much does GGE Enterprises Inc. owe to its creditors?
4. How much cash is being held by GGE Enterprises Inc.?
5. By what amount did retained earnings increase or decrease during the period?
6. What is the amount of profit or loss during December?
7. What were the total expenses for December?
8. How much was paid for rent?

Answer 1

1. as per accounting rule Total liabilities and stockholders equity = Total assets

So amount will be: $54,900

2.

Total stockholders equity	$   37,970
Less: Common stock	$ (29,250)
Retained earnings amount reported on December 31	$      8,720

3

Total assets	$   54,900
Less: Total stockholders equity	$ (37,970)
Accounts payable	$   16,930

4.

Total assets	$   54,900
Less: Supplies	$   (8,350)
Less: Land	$ (15,500)
Cash	$   31,050

5.

Total stockholders equity	$   37,970
Less: Common stock	$ (29,250)
Less: Retained earnings	$   (5,000)
Increase in retained earnings	$      3,720

6.

Total stockholders equity	$   37,970
Less: Common stock	$ (29,250)
Less: Retained earnings	$   (5,000)
Add: Dividends	$      5,750
Net income to be	$      9,470

7.

fees earned	$   27,500
Less: Net income	$   (9,470)
Total expenses	$   18,030

8.

Total expenses	$   18,030
Less: Wage expense	$   (6,500)
Less: Supplies expense	$   (4,650)
Less: Utilities expense	$   (1,295)
Rent expense	$      5,585

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