Answer:
Firm A Firm B Firm C
Total assets, 12/31/16 $417,000 $536,000 $316,000
Total liabilities, 12/31/16 216,000 144,000 $184,000
Paid-in capital, 12/31/16 75,000 $85,000 37,000
Retained earnings, 12/31/16 $126,000 307,000 $95,000
Net income for 2016 $94,000 85,000 117,000
Dividends declared and 44,000 9,000 66,000
paid during 2016
Retained earnings, 1/1/16 76,000 $231,000 44,000
Explanation:
Firm A Firm B Firm C
Total assets, 12/31/16 $417,000 $536,000 $316,000
Total liabilities, 12/31/16 216,000 144,000 _____
Paid-in capital, 12/31/16 75,000 _____ 37,000
Retained earnings, 12/31/16 _____ 307,000 _____
Net income for 2016 _____ 85,000 117,000
Dividends declared and 44,000 9,000 66,000
paid during 2016
Retained earnings, 1/1/16 76,000 _____ 44,000
we can use the following two basic formulas to determine the missing amounts:
ending balance retained earnings = beginning balance + net income - dividends paid
paid in capital = assets - liabilities - retained earnings
firm A:
417,000 - 216,000 - 75,000 = 126,000
126,000 + 44,000 - 76,000 = 94,000
firm B:
536,000 - 144,000 - 307,000 = 85,000
307,000 - 85,000 + 9,000 = 231,000
firm C:
44,000 + 117,000 - 66,000 = 95,000
316,000 - 37,000 - 95,000 = 184,000
