Ask Experts Questions for FREE Help !
Ask
    brandy3806's Avatar
    brandy3806 Posts: 2, Reputation: 1
    New Member
     
    #1

    Jul 9, 2012, 12:43 PM
    This is the problem I am stuck on.
    The cash balance was 4,000, and Notes Payable amounted to 2,000. The compnay had revenues of 6,000 and expenses of 3,500. The company's Land account had a 9,000 balance. Dividends amounted to 500. There was 6,000 of common stock issued.
    a)Assuming that the beginning balance in the Retained Earnings account was 2,600, determind its balance after the nominal accounts were closed.
    b)What is the net income to be reported?

    Can someone please help me with the formula to use and work the problem I seem to be getting the answer wrong when I try to work it.
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
    Ultra Member
     
    #2

    Jul 9, 2012, 03:25 PM
    The first formula you need is: Assets = Liabilities + Owners Equity

    Owners Equity = Owners Investments(common stock) + Retained Earnings

    So your Assets are Cash and Land.

    Libilities are Notes Payable.

    Owners Equity is Common Stock and Retained Earnings

    You have everything you need to calculate Retained Earnings

    Retained Earnings = Assets - Liabilities - Common Stock


    For B you need to compute Net Income. So: Net Income = Revenues - Expenses

    There seems to be a mistake in the numbers that are provided or some information is missing because the Retained Earnings amount will not be the same if calculated a different way. The other way to calculate Retained Earnings is: Ending Retained Earnings = Beginning Retained Earnings + Net Income - Dividends
    paraclete's Avatar
    paraclete Posts: 2,706, Reputation: 173
    Ultra Member
     
    #3

    Jul 9, 2012, 03:26 PM
    Quote Originally Posted by brandy3806 View Post
    The cash balance was 4,000, and Notes Payable amounted to 2,000. The compnay had revenues of 6,000 and expenses of 3,500. The company;s Land account had a 9,000 balance. Dividends amounted to 500. There was 6,000 of common stock issued.
    a)Assuming that the beginning balance in the Retained Earnings account was 2,600, determind its balance after the nominal accounts were closed.
    b)What is the net income to be reported?

    Can someone please help me with the formula to use and work the problem I seem to be getting the answer wrong when I try to work it.
    Sales - expenses = net earnings
    opening balance + net earnings for the year - dividends paid = closing balance

Not your question? Ask your question View similar questions

 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Accounting problem - stuck! [ 3 Answers ]

The monthly cash budgets for the first quarter of 2009 are shown below ($000 omitted) for XYZ Company. A minimum cash balance of $40,000 is required. A line of credit has been established with ABC's bank at a 7.5% interest rate. Calculate the missing amounts: ...

Having problem with physics coursework regarding magnetic flux density, I'm stuck [ 0 Answers ]

For my physics coursework, I've been measuring magnetic flux density of different solenoids. The solenoids are coils of wire wrapped around a hollow plastic cuboid (e.g. 5cm x 5cm x 30cm). I then stick a probe down the hollow centre which measures the magnetic flux density. Im unsure about my...

I was doing one Euler project problem, but stuck... [ 15 Answers ]

Okay, as the title says, I'm stuck. I got a program and from what I know, it is supposed to work, but fact is... it doesn't. I don't know what might be wrong it it, for is seems good to me. The question is to find the largest palindrome number (one which can be read in either directions, e.g.....

York residential furnace pressure switch problem code stuck switch [ 1 Answers ]

I have a york furnace P2MD12H06401A after 1 hour it shuts down and gives a 2 flash error for a stuck pressure switch. The switch is new can it be wired wrong? The old one had 2 white wires piggy back and 1 blue wire. The new switch has 3 separate terminals


View more questions Search