Question

can u please correct the wrong answers

E1-4 Completing a Balance Sheet and Inferring Net Income (LO2, LO3] Ken Young and Kim Sherwood organized Reader Direct as a corporation, each contributed $66150 cash to start the business and received 5,400 shares. The store completed its first year of operations on December 31, 2017. On that date, the following financial items for the year were determined cash on hand and in the bank. $55,200, amounts due from customers from sales of books. $36.000, property and equipment. $79.500; amounts owed to publishers for books purchased. $12.200: one-year note payable to a local bank for $9,150. No dividends were declared or paid to the shareholders during the year Required: 1. Complete the balance sheet at December 31, 2017: Answer is not complete. READER DIRECT Balance Sheet At December 31, 2017 Assets Liabilities Cash 12 200 55,200 36,000 79,500 Accounts receivable Accounts payable Nole payable DOO 9,150 Total liabilities 21,350 Shareholders' equity X 66,150 X Common shares Retained earnings 83,200 Total shareholders' equity Total liabilities & shareholders' equity 149.350 $ 170,700 Total assets $ 170,700 2. Using the retained earnings equation and an opening balance of $0.work backward to compute the amount of net income for the year ended December 31, 2017, Answer is complete but not entirely correct. Net income $ 83.200

Answer 1

Answer 1)

READER DIRECT
Balance Sheet
At December 31,2017
Assets	Liabilities
Cash and Bank	$       55,200	Accounts Payable	$     12,200
Accounts receivable	$       36,000	Notes Payable	$       9,150
Property Plant and equipment	$       79,500
		Total Liabilities	$     21,350
		Shareholders' Equity
		Common Stock	$ 132,300
		Retained earnings	$     17,050
		Total Shareholders' Equity	$ 149,350
Total Assets	$   170,700	Total Liabilities and Shareholders' Equity	$ 170,700

Working Notes:

Calculation of balance of Common Stock:

Common Stock = Capital Contributed by Ken Young + Capital Contributed by Kim Sherwood

                           = $ 66,150 + $ 66,150

                           =$ 132,300

Calculation of balance of Retained Earnings:

Total Assets = Total Liabilities + Shareholders’ Equity

Total Assets = Total Liabilities + (Common Stock + Retained Earnings)

$ 170,700 = $ 21,350 + $ 132,300 + Retained Earnings

Retained Earnings = $ 170,700 - $ 21,350 - $ 132,300

                                 =$ 17,050       

Answer 2)

Calculation of Net Income earned during December 31, 2017

Balance of Retained earnings as on December 31, 2017 = Balance of Retained earnings as on January 1, 2017 + Net Income earned during the year 2017 – Dividend paid during the year 2017

$ 17,050 = $ 0 + Net Income earned during the year 2017 - $ 0

Net Income earned during the year 2017 = $ 17,050

Therefore net income earned during the year 2017 is $ 17,050.

Answer 3)

Calculation of ending balance of retained earnings at December 31, 2018

Balance of Retained earnings as on December 31, 2018 = Balance of Retained earnings as on January 1, 2018 + Net Income earned during the year 2018 – Dividend paid during the year 2018

                                                                                                    = $ 17,050 +$ 5,450 - $ 2,700

                                                                                                    = $ 19,800

Therefore ending balance of retained earnings at December 31, 2018 is $ 19,800.