The following account balances were drawn from the financial statements of Grayson Company: $\begin{array}{llll}
\text { Cash } & \$ 6,000 & \text { Accounts payable } & \$ 2,050\
\text { Accounts receivable } & \$ 3,100 & \text { Common stock } &? \
\text { Land } & \$ 9,600 & \text { Retained earnings, } & \$ 4,300\
&& \text {January 1}\
&& \text {Revenue}& \$ 11,100 \
&& \text {Exmenses}&\$8,050
\end{array}$
Based on the above information, what is the balance of Common Stock for Grayson Company?
A) $12,350
B) $9,300
C) $1,250
D) $12,000

Question

The following account balances were drawn from the financial statements of Grayson Company: $\begin{array}{llll}
\text { Cash } & \$ 6,000 & \text { Accounts payable } & \$ 2,050\
\text { Accounts receivable } & \$ 3,100 & \text { Common stock } &? \
\text { Land } & \$ 9,600 & \text { Retained earnings, } & \$ 4,300\
 && \text {January 1}\
 && \text {Revenue}& \$ 11,100 \
 && \text {Exmenses}&\$8,050
\end{array}$
 Based on the above information, what is the balance of Common Stock for Grayson Company?
A) $12,350
B) $9,300
C) $1,250
D) $12,000

Quizplus · Accepted Answer

The balance of Common Stock can be calculated using the accounting equation: Assets = Liabilities + Equity. Total assets are $18,700 ($6,000 + $3,100 + $9,600), and total liabilities are $2,050. Equity is calculated as Retained Earnings (beginning $4,300 + Net Income $3,050) plus Common Stock. Solving for Common Stock gives $9,300.

The Following Account Balances Were Drawn from the Financial Statements