orenta Company has provided the following data (ignore income taxes):
Posted: Sat Aug 07, 2021 6:48 am
2019 revenues were $117,300.
2019 expenses were $47,800.
Dividends declared and paid during 2019 totaled $9,500.
Total assets at December 31, 2019 were $177,000.
Total liabilities at December 31, 2019 were $89,000.
Common stock at December 31, 2019 was $28,000.
Which of the following is not correct?
A) 2019 net income was $69,500.
B) Total stockholders' equity at December 31, 2019 was $88,000.
C) Total liabilities and stockholders' equity at December 31, 2019 was $177,000.
D) Retained earnings on December 31, 2019 were $41,700.
Answer: D
Explanation: Total assets ($177,000) = Total liabilities + stockholders' equity.
Stockholders' equity = Total assets ($177,000) − Total liabilities ($89,000) = $88,000.
Stockholders' equity ($88,000) = Common stock ($28,000) + Retained earnings ($60,000).
Retained earnings ($60,000) = Net income − Dividends declared ($9,500).
Net income = $69,500 = Revenue ($117,300) − Expenses ($47,800).
Difficulty: 3 Hard
Topic: Distinguish different financial statements
Learning Objective: 01-01 Recognize the information conveyed in each of the four basic
financial statements and the way that it is used by different decision makers (investors, creditors,
and managers).
2019 expenses were $47,800.
Dividends declared and paid during 2019 totaled $9,500.
Total assets at December 31, 2019 were $177,000.
Total liabilities at December 31, 2019 were $89,000.
Common stock at December 31, 2019 was $28,000.
Which of the following is not correct?
A) 2019 net income was $69,500.
B) Total stockholders' equity at December 31, 2019 was $88,000.
C) Total liabilities and stockholders' equity at December 31, 2019 was $177,000.
D) Retained earnings on December 31, 2019 were $41,700.
Answer: D
Explanation: Total assets ($177,000) = Total liabilities + stockholders' equity.
Stockholders' equity = Total assets ($177,000) − Total liabilities ($89,000) = $88,000.
Stockholders' equity ($88,000) = Common stock ($28,000) + Retained earnings ($60,000).
Retained earnings ($60,000) = Net income − Dividends declared ($9,500).
Net income = $69,500 = Revenue ($117,300) − Expenses ($47,800).
Difficulty: 3 Hard
Topic: Distinguish different financial statements
Learning Objective: 01-01 Recognize the information conveyed in each of the four basic
financial statements and the way that it is used by different decision makers (investors, creditors,
and managers).