Answer:
The ending balance of common stock during next year is $77,477.
Explanation:
- Determine the addition to retained earnings.
Addition to retained earnings =Netincome−Dividends
=$44,200−$12,000
=$32,200
Therefore, the addition to retained earnings is $32,200.
<em>It is given that the net income is $44,200. The dividend is $12,000. After settling the dividends, the net income is added to the retained earnings. Thus, $12,000 is deducted from $44,200. Therefore, the addition to retained earnings is $32,200.</em>
<em />
- Determine the ending balance of common stock during the next year.
Ending balance of commonstock= Total assets−Total liabilities
−Ending retained earnings
=($230,435+$55,000−$141,660−$66,328)
=$285,435−$141,660−$66,328
=$77,477
Therefore, the ending balance of common stock during the next year is $77,477.
Working notes:
Determine the beginning balance of common stock:
Commonstock= Total assets − Tota liabilities −Retainedearnings
=$230,435−$141,660−$34,128
=$54,647
Therefore, the beginning balance of common stock is $54,647.
Calculate the ending retained earnings:
Ending retained earnings =Retained earnings + Addition to retained earnings
=$34,128+$32,200
=$66,328
Therefore, the ending retained earnings are $66,328.
The ending balance of common stock during next year is $77,477.
