Blue Hen Company started their operations Jan. 1, 2010. Blue Hen Company prepare
ID: 2492801 • Letter: B
Question
Blue Hen Company started their operations Jan. 1, 2010. Blue Hen Company prepares annual financial statements every December 31. On December 31, 2011 Blue Hen Company prepared the following Balance Sheet:
Assets
Cash 5,000
Accounts Receivable 1000
Equipment (less 100 AD) 900
Liabilities
Accounts Payable 1500
Equity
Common Stock 2000
Retained Earnings 3,400
Other Information:
• The Equipment has a 10 year life and No salvage value.
Transactions for 2012:
• July 1 – Issued common stock for $1,500.
• November 1 – Earned $1,000 on account for providing services to customers
• December 1 - Incurred $3000 in Operating Expenses on account.
• December 1 – Collected $500 cash from customers as payment on account
• Purchased Land for $2,000 cash.
• December 15 – Declared and paid a $50 dividend.
• Assume that Blue Hen pays no taxes.
• Remember to record depreciation for 2012
How much have the stockholder’s of Blue Hen invested into to the company?
a. 3,450
b. 3,500
c. 2,000
d. 5,150
e. None of these are correct
Explanation / Answer
The common stock account represents the amount invested by the stockholders into the company.
Common stock account as on 31.12.2011 $ 2000
Add: Issue during the year $ 1,500
Amount invested $ 3,500
b) 3,500