Answer:
Case A Case B
Revenues 200,000 $110,000
Expenses $160,000 70,000
Net Income $40,000 $40,000
Retained Earnings, Jan 1 300,000 100,000
Dividends Paid 70,000 30,000
Retained Earnings, Dec 31 270,000 $110,000
Current Assets, Dec 31 80,000 $230,000
Non-current Assets, Dec 31 $710,000 180,000
Total Assets, Dec 31 $930,000 410,000
Current Liabilities, Dec 31 40,000 60,000
Noncurrent liabilities $100,000 $140,000
Total Liabilities, Dec 31 140,000 $200,000
CS and APIC 520,000 100,000
Total Stockholder's Equity, Dec 31 $790,000 210,000
case a:
retained earnings = previous balance + net income - dividends
net income = $270,000 - $300,000 + $70,000 = $40,000
expenses = revenue - net income = $200,000 - $40,000 = $160,000
total stockholders' equity = CS + APIC + retained earnings = $520,000 + $270,000 = $790,000
total assets = total equity + total liabilities = $790,000 + $140,000 = $930,000
noncurrent liabilities = total liabilities - current liabilities = $140,000 - $40,000 = $100,000
noncurrent assets = total assets - current assets = $790,000 - $80,000 = $710,000
case b:
retained earnings = total equity - CS and APIC = $210,000 - $100,000 = $110,000
net income = $110,000 - $100,000 + $30,000 = $40,000
revenue = net income + expenses = $40,000 + $70,000 = $110,000
current assets = total assets - noncurrent assets = $410,000 - $180,000 = $230,000
total liabilities = total assets - equity = $410,000 - $210,000 = $200,000
noncurrent liabilities = total liabilities - current liabilities = $200,000 - $60,000 = $140,000
