FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Ken Young and Kim Sherwood organized Reader Direct as a corporation; each contributed $49,000 cash to start the
business and received 4,000 shares of stock. The store completed its first year of operations on December 31, 2020. On
that date, the following financial items for the year were determined: cash on hand and in the bank, $47,500; amounts due
from customers from sales of books, $26,900; equipment, $48,000; amounts owed to publishers for books purchased,
$8,000; one-year notes payable to a local bank for $2,850. No dividends were declared or paid to the stockholders
during the year.
E1-4 (Static) Part 2
2. Using the retained earnings equation and an opening balance of $0, work backwards to compute the amount of net income for the
year ended December 31, 2020.
Net Income Ending RE + Dividends - Beginning RE
=
=
+](https://content.bartleby.com/qna-images/question/716351ed-d91d-4cdd-89a0-7756366343a9/7df566dc-1015-4fb3-a2f7-02858a4d9d59/kwmvqsa_processed.jpeg)
Transcribed Image Text:The following information applies to the questions displayed below.]
Ken Young and Kim Sherwood organized Reader Direct as a corporation; each contributed $49,000 cash to start the
business and received 4,000 shares of stock. The store completed its first year of operations on December 31, 2020. On
that date, the following financial items for the year were determined: cash on hand and in the bank, $47,500; amounts due
from customers from sales of books, $26,900; equipment, $48,000; amounts owed to publishers for books purchased,
$8,000; one-year notes payable to a local bank for $2,850. No dividends were declared or paid to the stockholders
during the year.
E1-4 (Static) Part 2
2. Using the retained earnings equation and an opening balance of $0, work backwards to compute the amount of net income for the
year ended December 31, 2020.
Net Income Ending RE + Dividends - Beginning RE
=
=
+
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