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Calculate Tax Liability 2008

Question: Accounting Question: Calculate the Balance in the Common Stock Account?

The following information was taken from the accounting records of XYZ Company for the year ended
December 31, 2008:

Cost of Goods Sold $50,000
Salaries Payable $26,000
Inventory ?
Cash $18,000
Accounts Payable $65,000
Common stock ?
Accounts Receivable $37,000
Retained Earnings $40,000 (at January 1, 2008)
Salaries Expense $31,000
Land ?
Interest Revenue $11,000
Supplies $10,000
Notes Payable $94,000
Patent $15,000
Sales Revenue $97,000
Equipment $85,000
Income Tax Expense $10,000

Additional information
1. Total equity at December 31, 2008 is equal to 80% of total liabilities at December 31, 2008.

Calculate the balance in the common stock account at December 31, 2008. Do not use decimals in
your answer.

Answer: 97,000 Sales Revenue
+ 11,000 Interest Revenue
- 50,000 Cost of Goods Sold
- 31,000 Salaries Expense
- 10,000 Income Tax Expense
= 17,000 Net Income

40,000 + 17,000 = 57,000 Dec. 31, 2008 balance Retained Earnings

Liabilities = 26,000 + 65,000 + 94,000 = 185,000
Total Equity = 185,000 x 80% = 148,000
148,000 – 57,000 = 91,000 balance in common stock on Dec. 31, 2008

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