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Question Content Area
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.