Question

Leviathan Global, Inc. (LGI) provides organizational services to opera companies and symphonies. LGI has hired you to prepare its financial statements. Osvaldo Garza, Chief Executive Officer, and 60% shareholder in LGI, has a Master of Fine Arts from the Julliard School in New York, no accounting education or experience, and provided you with the following data: LGI was sued in 2019 from breach of contract. LGI is accused of providing substandard seating at a concert and the petitioner is suing for $100,000 in damages. As of December 31, 2019, the case was still be adjudicated. Osvaldo had a 401K balance of $450,000 as of December 31, 2019. Osvaldo purchased a used Tesla Roadster in 2019 for $80,000. Osvaldo gives you a typed list of LGl income information, expense information, assets and liabilities on December 31, 2019: Accounts Payable $122,000 Land $900,000 Accounts Receivable $313,500 Misc. Expense $129,500 Cash $530,500 $630,000 Office Expense Common Stock $1,000,000 Supplies $ 33,500 Fees Earned $2,632,000 Wages Expense $1,317,000 Retained Earnings on January 1, 2019, were $300,000. During 2019, LGI paid $200,000 in dividends.

Answer 1

solution

Revenue to be reported by LG in 2019 -Revenue is income earned ny business from its business activity in form of sales or any fees earned .

Thus here the revenue (fees earned) is $ 2,632,000

Question 80 Total expenses during year 2019

Expenses of business are revenue expenses incurred to earn revenue of the business.

Thus it includes the followings

Mis. expense+offce expense+wages expense

$ 129,500+ 630,000+1,317,000= $ 2,076,500

Question 81 Net income for 2019

Net income = revenue - expenses

= $ 2,632.000- 2,076,500 = $ 555,500

Question 81

Change in retained earning in 2019

= net income - divideds distributed

=$ 555,500-200,000=$ 355,500

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