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Financial and Managerial Accounting
Financial and Managerial Accounting
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EX 1-15 Net income and stockholders’ equity for four businesses OBJ. 5
Kilo: Net income, Four different corporations, Juliet, Kilo, Lima, and Mike, show the same balance sheet data
$230,000 at the beginning and end of a year. These data, exclusive of the amount of stockholders’
equity, are summarized as follows:
Total Assets Total Liabilities
Beginning of the year $ 600,000 $150,000
End of the year 1,125,000 500,000
On the basis of the above data and the following additional information for the year,
determine the net income (or loss) of each company for the year. (Hint: First determine
the amount of increase or decrease in stockholders’ equity during the year.)
Juliet: No additional capital stock was issued, and no dividends were paid.
Kilo: No additional capital stock was issued, but dividends of $55,000 were paid.
Lima: Additional capital stock of $100,000 was issued, but no dividends were paid.
Mike: Additional capital stock of $100,000 was issued, and dividends of $55,000 were paid.
a. Prepare a retained earnngs statement for the month ended November 30, 2014.
b. Why is the retained earnings statement prepared before the November 30, 2014, bal-
ance sheet?