The following account balances were drawn from the Year 1 financial statements of Grayson Company:

What is the balance of the Common Stock account?
A)$15,400
B)$19,900
C)$900
D)$20,800

Question

The following account balances were drawn from the Year 1 financial statements of Grayson Company:

What is the balance of the Common Stock account?
A)$15,400 
B)$19,900 
C)$900 
D)$20,800

Quizplus · Accepted Answer

Assets = Liabilities + Equity
$8,800 + $3,000 + $16,000 = $2,500 + Equity
Equity = $25,300
Equity = Common stock + Retained earnings
$25,300 = Common Stock + ($5,400 + $19,000 - $15,500)
$25,300 = Common Stock + $9,900
Common Stock = $15,400

The Following Account Balances Were Drawn from the Year 1