Answer:
$13,000 is the year-end balance in retained earnings for K and J Nursery, Inc.
Explanation:
Total Assets = Cash + Account Receivable + Inventory + Equipment
Total Assets = 35,000 + 30,000 + 44,000 + 99,000
Total Assets = 208,000
Total Liabilities = Account Payable + Salaries Payable + Interest Payable + Note Payable
Total Liabilities = 33,000 + 14,500 + 10,500 + 49,000
Total Liabilities = 107,000
Total Assets = Total Equity + Total Liabilities
Total Equity = Total Assets - Total Liabilities
Total Equity = 208,000 - 107,000
Total Equity = 101,000
Retained Earning = Total Equity - Common Stock
Retained Earning = 101,000 - 88,000
Retained Earning = 13,000
In my understanding, this assignment wants you to evaluate the decision made by the management officer, in her attempt to improve the business position.
First of all, net profit figure shows the profitability of the business. Net profit figure means the total profit earned minus all the costs incurred in running the business. Higher net profit figure in year 1 might indicate a favourable position, as it could be that higher profit is generated from using whatever method/machine they use in year 1, or running this machine incurred less cost. In year 2, they didn't necessarily earn lower profit, but running the new machine might be more costly.
Next, rate of productivity growth refers to the growth in quantity of output produced. If more output can be produced, this means higher efficiency. This means that the efficiency of production in year 2 is more than in year 1.
Thirdly, the number of customer's complaints is important in evaluating the business' goodwill, in this case, its position in the society. Without good relationship with the public, a company may lose its customer. It is always important to keep clients satisfied since they're the source of income to the business. This means that the management decision in year 2 is more favourable than in year 1.
Last but not least, rate of absenteeism can be evaluated in terms of productivity . Higher absenteeism means lower productivity, lower output but higher cost to the business since they're paying salaries to workers who don't produce output to sell. Less output to sell means less income can be earned. In year 1, the business productivity is higher than in year 2.
In year 2, the business has a boost in their efficiency & reputation. Although less profit earned, it is likely that this will grow in the future. Staff attendance can be improved by encouragement such as giving incentives for example, provision of more holidays.
I hope this is helpful!
It is an unincorporated business owned and run by one individual with no distinction between the business and the owner.
