Financial data for Lifecycle Fashion is given below. All figures are in dollars. Use this data to construct a Balance Sheet for the company for the year ending December 31, 2022 and use your constructed statement to answer the following 5 questions (i.e., 26 through 30). NOTE: Not every item in the list below belongs on the balance sheet – you have to use some given data to determine needed accounts for the balance sheet. However, other than what is listed and/or can be derived, there are no other accounts on the company’s balance sheet – use cash as a plug figure to balance the balance sheet.
Accounts payable 450,500
Accruals 200,800
Accumulated depreciation 9,817,400
Additional paid in capital 2,971,700
Beginning of year inventory 2,480,300
Common stock ($1.25 par value) 596,300
Cost of goods sold 19,917,700
Current portion of Long-term debt 518,400
Gross accounts receivable 951,600
Gross fixed assets 24,550,300
Long-term debt (excluding current portion) 11,337,700
Purchases 20,577,700
Retained earnings 4,608,900
Returns and allowances 36,100
Short-term bank loan 131,100
Cash ???
26. What did Lifecycle Fashion record as Total Current Assets on December 31, 2022 balance sheet?
27. What did Lifecycle Fashion record as Total Current Liabilities on December 31, 2022 balance sheet? 28. What did Lifecycle Fashion record as Total Assets on December 31, 2022 balance sheet?
29. What was Total Shareholder’s Equity on Lifecycle Fashion December 31, 2022 balance sheet?
30. Lifecycle Fashion reported net income for 2022 of $1,038,200 and the company paid dividends of $1.75 per share in 2022. Given this information (along with the data provided above), compute what Lifecycle Fashion reported as retained earnings on its December 31, 2021 balance sheet? (Assume that no additional shares of stock were issued between December 31, 2021 and December 31, 2022)
To construct the Balance Sheet for Lifecycle Fashion for the year ending December 31, 2022, we’ll first need to organize the provided financial data into the appropriate categories. The Balance Sheet equation is Assets = Liabilities + Shareholders’ Equity. Let’s calculate each component step by step.
Total Current Assets (Question 26)
Gross accounts receivable: $951,600
Beginning of year inventory: $2,480,300
Cash: We’ll calculate this later by balancing the equation.
Short-term bank loan: $131,100
Current portion of Long-term debt: $518,400
Total Current Assets = $951,600 + $2,480,300 + Cash – $131,100 – $518,400
Total Current Liabilities (Question 27):
Accounts payable: $450,500
Accruals: $200,800
Short-term bank loan: $131,100
Current portion of Long-term debt: $518,400
Total Current Liabilities = $450,500 + $200,800 + $131,100 + $518,400
Total Assets (Question 28)
Gross fixed assets: $24,550,300
Total Current Assets (from step 1)
Accumulated depreciation: $9,817,400
Total Assets = $24,550,300 + Total Current Assets – $9,817,400
Total Shareholders’ Equity (Question 29)
Common stock ($1.25 par value): $596,300
Additional paid-in capital: $2,971,700
Retained earnings (which we’ll calculate in step 5)
Total Shareholders’ Equity = $596,300 + $2,971,700 + Retained Earnings
Retained Earnings (Question 30)
Net income for 2022: $1,038,200
Dividends paid in 2022: $1.75 per share * Number of shares outstanding
To calculate the number of shares outstanding, we’ll use the Common Stock amount and the par value: Number of shares = Common Stock / Par Value per Share
Number of shares = $596,300 / $1.25 = 477,040 shares
Total Dividends Paid = $1.75 * 477,040 shares = $834,380
Retained Earnings = Retained Earnings (Dec 31, 2021) + Net Income for 2022 – Dividends Paid
Now, let’s plug these values into the equations:
Total Current Assets = $951,600 + $2,480,300 + Cash – $131,100 – $518,400
Total Current Liabilities = $450,500 + $200,800 + $131,100 + $518,400
Total Assets = $24,550,300 + Total Current Assets – $9,817,400
Total Shareholders’ Equity = $596,300 + $2,971,700 + Retained Earnings
Retained Earnings = Retained Earnings (Dec 31, 2021) + $1,038,200 – $834,380
Once you’ve calculated these values, you can answer the questions as follows:
Total Current Assets on December 31, 2022, balance sheet = Value calculated in step 1.
Total Current Liabilities on December 31, 2022, balance sheet = Value calculated in step 2.
Total Assets on December 31, 2022, balance sheet = Value calculated in step 3.
Total Shareholders’ Equity on December 31, 2022, balance sheet = Value calculated in step 4.
Retained Earnings on December 31, 2021, balance sheet = Value calculated in step 5.
These calculations will provide you with the necessary information to complete Lifecycle Fashion’s balance sheet for the year ending December 31, 2022, and answer the questions about their financial position.
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