Question

Carlos Ramirez and Camila Garza organized New World Book Store as a corporation; each contributed $70,100 cash to start the business and received 4,400 shares of common stock. The store completed its first year of operations on December 31, 2014. On that date, the following financial items for the year were determined: December 31, 2014, cash on hand and in the bank, $68,650; December 31, 2014, amounts due from customers from sales of books, $43,000; unused portion of store and office equipment, $74,000; December 31, 2014, amounts owed to publishers for books purchased, $12,100; one-year note payable to a local bank for $3,900, with interest due of $140. No dividends were declared or paid to the stockholders during the year.

What was the amount of net income for the year? (Hint: Use the retained earnings equation [Beginning Retained Earnings + Net Income − Dividends = Ending Retained Earnings] to solve for net income.)

Answer 1

Dear Student
Thank you for using Chegg
Please find below the answer
Statementshowing Computations
Liabilities	Amount	Assets	Amount
Common Stock	70,100.00	cash on hand and in the bank	68,650.00
amounts owed to publishers for books purchased	12,100.00	amounts due from customers from sales of books	43,000.00
one-year note payable to a local bank	3,900.00	unused portion of store and office equipment	74,000.00
interest due	140.00
Retained Earnings (bal fig)	99,390.00
	185,630.00		185,650.00
Beginning Retained Earnings	$0.00
Dividend	$0.00
Thus Net income = Ending retained earnings	99,390.00