Question

On November 1 of the current year, Rob Elliot invested $30,000.00 of his cash to form a corporation, GGE Enterprises Inc., in exchange for shares of common stock. No other common stock was issued during November or December. After a very successful first month of operations, the retained earnings as of November 30 were reported at $5,000.00. After all transactions have been entered into the accounting equation for the month of December, the ending balances for selected items on December 31 follow. On that date, the financial statements were prepared. The balance sheet reported total assets of $55,650.00 and total stockholders' equity of $38,000.00.
Cash Supplies Land Accounts Payable Common Stock Retained Earnings Dividends Fees Earned Wages Expense Rent Expense Supplies Expense Utilities Expense Miscellaneous Expense
? $8,600.00 $16,500.00 ? ? $5,000.00 $5,750.00 $26,750.00 $6,400.00 ? $4,650.00 $1,265.00 $460.00
Review the following questions. Indicate which financial statement(s) report the desired information. Enter the amount reported on the financial statement. (Select "Yes" or "No")
Balance Sheet Income Statement Retained Earnings Statement Amount
1. What is the amount reported for total liabilities and stockholders' equity on December 31? $
2. What is the retained earnings amount reported on December 31? $
3. How much does GGE Enterprises Inc. owe to its creditors? $
4. How much cash is being held by GGE Enterprises Inc.? $
5. By what amount did retained earnings increase or decrease during the period? $
6. What is the amount of profit or loss during December? $
7. What were the total expenses for December? $
8. How much was paid for rent? $

Answer 1

Answer:

GGE Enterprises Inc.

1a. The amount reported for total liabilities is:

= $17,650

1b. The amount reported for stockholders' equity is:

= $38,000

2. Retained earnings reported on December 31 is:

= $8,000

3. Total amount that GGE Enterprises owes to its creditors is:

= $17,650

4. The cash being held by GGE Enterprises Inc. is:

= $30,550

5. The retained earnings increased by $3,000 during the period.

6. The amount of profit during December is:

= $8,750

7. The total expenses for December is:

= $18,000

8. The amount paid for rent was:

= $5,225

Explanation:

a) Data and Calculations:

Total assets = $55,650

Total stockholders' equity = $38,000

Total liabilities = $17,650 ($55,650 - $38,000)

Account Titles                    Debit          Credit

Cash                           $30,550.00

Supplies                          8,600.00

Land                              16,500.00

Accounts Payable                             $17,650.00

Common Stock                                  30,000.00

Retained Earnings                               5,000.00

Dividends                      5,750.00

Fees Earned                                   $26,750.00

Wages Expense         $6,400.00

Rent Expense               5,225.00

Supplies Expense        4,650.00

Utilities Expense           1,265.00

Miscellaneous Expense 460.00

Total                        $79,400.00   $79,400.00

Cash = $30,550 (Total assets - Supplies - Land)

Rent expense =$5,225  ($79,400 - $74,175

Common stock = $30,000

Accounts payable = Total assets - Owners' equity

= $17,650 ($55,650 - $38,000)

Net income:

Fees Earned                                   $26,750.00

Wages Expense         $6,400.00

Rent Expense               5,225.00

Supplies Expense        4,650.00

Utilities Expense           1,265.00

Miscellaneous Expense 460.00     18,000.00

Net income                                     $8,750.00

Dividends                                        (5,750.00)

Retained earnings, November 30  5,000.00

Retained earnings, December 31 $8,000.00

1a. The amount reported for total liabilities is:

= $17,650 ($55,650 - $38,000)

1b. The amount reported for stockholders' equity is:

= $38,000 ($30,000 + $8,000)

2. Retained earnings reported on December 31 is:

= $8,000

3. Total amount that GGE Enterprises owes to its creditors is:

= $17,650

4. The cash being held by GGE Enterprises Inc. is:

= $30,550

5. The retained earnings increased by $3,000 during the period.

6. The amount of profit during December is:

= $8,750

7. The total expenses for December is:

= $18,000

8. The amount paid for rent was:

= $5,225