Question

1. GGE Enterprises Inc.

   On November 1 of the current year, Rob Elliot invested $29,500 of his cash to form a A business organized under state or federal statutes as a separate legal entity.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. 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 $55,900 and total stockholders' equity of $36,825.

   Cash

   Supplies

   Land

   Accounts Payable

   Common Stock

   Retained Earnings

   Dividends

   Fees Earned

   Wages Expense

   Rent Expense

   Supplies Expense

   Utilities Expense

   Miscellaneous Expense

   ?

   $7,600

   $16,500

   ?

   ?

   $5,000

   $6,250

   $26,500

   $6,450

   ?

   $4,675

   $1,280

   $370

   Review the following questions. Indicate which financial statement(s) report the desired information. Enter the amount reported on the financial statement.

   (Select "Yes" or "No" from the below dropdowns.)

   	Balance Sheet	Income Statement	Statement of Stockholders' Equity	Amount
   1. What is the amount reported for total liabilities and stockholders' equity on December 31?	Yes Yes No	No Yes No	No Yes No	$ 54,150
   2. What is the retained earnings amount reported on December 31?	Yes Yes No	No Yes No	Yes Yes No	$ 9,485
   3. How much does GGE Enterprises Inc. owe to its creditors?	Yes Yes No	No Yes No	No Yes No	$ 15,415
   4. How much cash is being held by GGE Enterprises Inc.?	Yes Yes No	No Yes No	No Yes No	$ 30,050
   5. By what amount did retained earnings increase or decrease during the period?	Yes Yes No	No Yes No	Yes Yes No	$ 4,485
   6. What is the amount of profit or loss during December?	Yes No	Yes No	Yes No	$
   7. What were the total expenses for December?	Yes No	Yes No	Yes No	$
   8. How much was paid for rent?	Yes No	Yes No	Yes No

Answer 1

			Statement of	Amount
	Balance	Income	Stockholders'
	Sheet	Statement	Equity
1. What is the amount reported for total liabilities and stockholders' equity on December 31?	Yes	No	No	$   55,900.00
2. What is the retained earnings amount reported on December 31?	Yes	No	Yes	$     7,325.00
3. How much does GGE Enterprises Inc. owe to its creditors?	Yes	No	No	$   19,075.00
4. How much cash is being held by GGE Enterprises Inc.?	Yes	No	No	$   31,800.00
5. By what amount did retained earnings increase or decrease during the period?	No	No	Yes	$     2,325.00
6. What is the amount of profit or loss during December?	No	Yes	Yes	$     8,575.00
7. What were the total expenses for December?	No	Yes	No	$   17,925.00
8. How much was paid for rent?	No	Yes	No	$ 5150

Working:

Answer 1.

Total Liabilities and Stockholders’ Equity = Total Assets

Total Liabilities and Stockholders’ Equity = $55900

Answer 2.

Total Stockholders’ Equity = Common Stock + Retained Earnings

$36,825 = $29,500 + Retained Earnings

Retained Earnings = $7325

Answer 3.

Total Liabilities and Stockholders’ Equity = Total Liabilities + Total Stockholders’ Equity

$55,900 = Total Liabilities + $36,825

Total Liabilities = $19075

Total Liabilities = Accounts Payable

Accounts Payable = $19074

Answer 4.

Total Assets = Cash + Supplies + Land

$55,900 = Cash + $7600 + 16,500

Cash = $31,800

Answer 5.

Increase in Retained Earnings = Retained Earnings, December 31 - Retained Earnings, November 30

Increase in Retained Earnings = $7325 - $5,000

Increase in Retained Earnings = $2325

Answer 6.

Increase in Retained Earnings = Net Income - Dividends

$2325 = Net Income - $6250

Net Income = $8,575

Answer 7.

Net Income = Fees Earned - Total Expenses

$8,575 = $26,500 - Total Expenses

Total Expenses = $17,925

Answer 8.

Total Expenses = Wages Expense + Rent Expense + Supplies Expense + Utilities Expense + Miscellaneous Expense

$17,925 = $6,450 + Rent Expense + $4,675 + 1280 + 370

Rent Expense= $5150

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