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Balance sheets, net income

Financial information related to the corporation of Ebony Interiors for February and March 20Y3 is as follows:


Line Item Description February 28, 20Y3 March 31, 20Y3
Cash $139,600 $237,000
Accounts receivable 79,100 90,900
Supplies 7,000 5,800
Accounts payable 35,800 38,700
Common stock 130,000 130,000
Retained earnings ? ?

Question Content Area
a. Prepare balance sheets for Ebony Interiors as of February 28, 20Y3.
b. Prepare ba;amce sheet for Ebpny Interiors as of March 31, 20Y3

Answer 1

To prepare the balance sheets for Ebony Interiors as of February 28, 20Y3, and March 31, 20Y3, we will first outline the balance sheet equation, which is:

**Assets = Liabilities + Shareholders' Equity**

Where:
- **Assets** include cash, accounts receivable, and supplies.
- **Liabilities** include accounts payable.
- **Shareholders' Equity** includes common stock and retained earnings.

### a. Balance Sheet for Ebony Interiors as of February 28, 20Y3

#### Assets
- Cash: $139,600
- Accounts Receivable: $79,100
- Supplies: $7,000

**Total Assets** = Cash + Accounts Receivable + Supplies
Total Assets = $139,600 + $79,100 + $7,000 = **$225,700**

#### Liabilities
- Accounts Payable: $35,800

**Total Liabilities** = Accounts Payable
Total Liabilities = **$35,800**

#### Shareholders' Equity
- Common Stock: $130,000
- Retained Earnings: ?

Using the balance sheet equation:
Total Assets = Total Liabilities + Shareholders' Equity
$225,700 = $35,800 + ($130,000 + Retained Earnings)
$225,700 = $165,800 + Retained Earnings

To find Retained Earnings:
Retained Earnings = $225,700 - $165,800 = **$59,900**

**Balance Sheet as of February 28, 20Y3:**

| **Assets** | Amount |
|---------------------------------|---------------|
| Cash | $139,600 |
| Accounts Receivable | $79,100 |
| Supplies | $7,000 |
| **Total Assets** | **$225,700** |

| **Liabilities and Shareholders' Equity** | Amount |
|------------------------------------------|--------------|
| Accounts Payable | $35,800 |
| Common Stock | $130,000 |
| Retained Earnings | $59,900 |
| **Total Liabilities and Shareholders' Equity** | **$225,700** |

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### b. Balance Sheet for Ebony Interiors as of March 31, 20Y3

#### Assets
- Cash: $237,000
- Accounts Receivable: $90,900
- Supplies: $5,800

**Total Assets** = Cash + Accounts Receivable + Supplies
Total Assets = $237,000 + $90,900 + $5,800 = **$333,700**

#### Liabilities
- Accounts Payable: $38,700

**Total Liabilities** = Accounts Payable
Total Liabilities = **$38,700**

#### Shareholders' Equity
- Common Stock: $130,000
- Retained Earnings: ?

Using the balance sheet equation:
Total Assets = Total Liabilities + Shareholders' Equity
$333,700 = $38,700 + ($130,000 + Retained Earnings)
$333,700 = $168,700 + Retained Earnings

To find Retained Earnings:
Retained Earnings = $333,700 - $168,700 = **$165,000**

**Balance Sheet as of March 31, 20Y3:**

| **Assets** | Amount |
|---------------------------------|---------------|
| Cash | $237,000 |
| Accounts Receivable | $90,900 |
| Supplies | $5,800 |
| **Total Assets** | **$333,700** |

| **Liabilities and Shareholders' Equity** | Amount |
|------------------------------------------|--------------|
| Accounts Payable | $38,700 |
| Common Stock | $130,000 |
| Retained Earnings | $165,000 |
| **Total Liabilities and Shareholders' Equity** | **$333,700** |

These are the balance sheets for Ebony Interiors as of February 28, 20Y3, and March 31, 20Y3.