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Accounting Calculations for Wasson Corporation

Shown below are the amounts from the stockholders' equity section of the balance sheets of Wasson Corporation for the years ended December 31, 2010 and 2011.

2011 2010
Stockholders' equity:
Capital Stock $50,000 $30,000
Retained Earnings $200,000 $180,000
Total stockholders' equity $250,000 $210,000

a. Calculate the amount of additional investment that the stockholders made during 2011.
b. Assuming that the corporation declared and paid $10,000 in dividends during 2011, calculate the amount of net income earned by the corporation during 2011.
c. Explain the significance of the $200,000 balance of retained earnings at December 31, 2011.

Solution Preview

Answers to your three questions are provided in the attached word file and it is also produced below.

Answer:
(a) Calculation of additional investment by stockholders during 2011
Ending balance of capital stock $50000
Less: Beginning balance of capital stock $30000
Additional ...

Solution Summary

This solution provides assistance calculating the amount of additional investment that the stockholders made during 2011, the amount of net income earned by the corporation during 2011, and explains the significance of the $200,000 balance of retained earnings at December 31, 2011.

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