Expert Solutions

1. Firm A Firm B Firm C
Total assets, 12/31/10 $ 406,000 $ 534,000 $ 332,000
Total liabilities, 12/31/10 213,000 145,000 ?
Paid-in capital, 12/31/10 82,000 ? 43,000
Retained earnings, 12/31/10 ? 302,000 ?
Net income for 2010 ? 87,000 110,000
Dividends declared and paid during 2010 44,000 14,000 60,000
Retained earnings, 1/1/10 83,000 ? 42,000

2. The information presented here represents selected data from the December 31, 2010, balance sheet and income statements for the year then ended.
Retained earnings, December 31, 2009 $ 309,900
Cost of equipment purchased during 2010 45,000
Net loss for the year ended December 31, 2010 4,500
Dividends declared and paid in 2010 16,800
Decrease in cash balance from January 1, 2010, to December 31, 2010 14,800
Decrease in long-term debt in 2010 16,000
Required: Calculate the retained earnings balance as of December 31, 2010.
Retained earnings $

3. At the beginning of its current fiscal year, Willie Corp.’s balance sheet showed assets of $11,600 and liabilities of $6,900. During the year, liabilities decreased by $800. Net income for the year was $3,000, and net assets at the end of the year were $5,200. There were no changes in paid-in capital during the year.
A = L + PIC + RE
Beginning $11,600 = $6,900 + $0 + $ 4,700
Changes: ( ) = (800) + 0 + 3,000 (net income)
( ) (dividends)
Ending: $ = $ + $0 + $

4. At the beginning of the current fiscal year, the balance sheet for Davis Co. showed liabilities of $256,000. During the year liabilities decreased by $14,400, assets increased by $52,000, and paidin capital increased from $24,000 to $153,600. Dividends declared and paid during the year were $20,000. At the end of the year, owners’ equity totaled $343,200.
Required: Calculate net income (or loss) for the year.
Assets = Liabilities + PIC + RE
Beginning: $ $256,000 $24,000 $
Changes: +52,000 (14,400) ( )
20,000 (dividends)
Ending: $ $ $153,600 $
($ 343,200 total OE)