Question

In: Accounting

On November 1 of the current year, Rob Elliot invested $30,500.00 of his cash to form...

On November 1 of the current year, Rob Elliot invested $30,500.00 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 $54,650.00 and total stockholders' equity of $39,785.00.



Cash ?
Supplies $7, 600
Land $16,000
Accounts Payable ?
Common Stock ?
Fees Earned $27,750
Dividends $5,500
Retained Earnings $5,00
Wages Expense $6,375
Rent Expense ?
Supplies Expense $4,675
Utilities Expense $1,250
Misc. Expense $415


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?  

Solutions

Expert Solution

GGE Enterprises Inc.
Balance Sheet
December 31
Assets
Cash 31050
Supplies 7600
Land 16000
Total assets 54650
Liabilities
Accounts payable 14865
Stockholders' Equity
Common stock 30500
Retained earnings 9285
Total stockholders' equity 39785
Total liabilities and stockholders' equity 54650
Income Statement
Fees earned 27750
Expenses:
Wages expense 6375
Rent expense 5250
Supplies expense 4675
Utilities expense 1250
Miscellaneous expense 415
Total expense 17965
Net income 9785

Working:

Cash = Total assets - Supplies - Land - $54650 - 7600 - 16000 = $31050
Total liabilities and stockholders' equity = Total assets = $54650
Total liabilities (Accounts Payable) = Total liabilities and stockholders' equity - Total stockholders' equity = $54650 - $39785 = $14865
Retained earnings (ending) = Total stockholders' equity - Common stock = $39785 - $30500 = $9285
Retained earnings (ending) = Retained earnings (beginning) + Net income - Dividends
$9285 = $5000 + Net income - $5500
Net income = $9285 + $5500 - $5000 = $9785
Total expense = Fees earned - Net income = $27750 - $9785 = $17965
Rent expense = Total expense - Wages - Supplies - Utilities - Misc. = $17965 - 6375 - 4675 - 1250 - 415 = $5250
1. Total liabilities and stockholders' equity: $54650
2. Retained earnings: $9285
3. Amount owed to creditors: $14865
4. Cash: $31050
5. Increase in Retained earnings: $4285
6. Profit $9785
7. Total expenses: $17965
8. Paid for rent: $5250

ekkarill92 answered 1 year ago
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