The following information was drawn from the accounting records of Wyckoff Company as of December 31, 2016,

Question:

The following information was drawn from the accounting records of Wyckoff Company as of December 31, 2016, before the temporary accounts had been closed. The Cash balance was $3,600, and Notes Payable amounted to $4,000. The company had revenues of $7,500 and expenses of $3,400. The company’s Land account had an $8,000 balance. Dividends amounted to $1,000. There was $2,000 of common stock issued.

Required

a. Identify which accounts would be classified as permanent and which accounts would be classified as temporary.

b. Assuming that Wyckoff’s beginning balance (as of January 1, 2016) in the Retained Earnings account was $2,500; determine its balance after the temporary accounts were closed at the end of 2016.

c. What amount of net income would Wyckoff Company report on its 2016 income statement?

d. Explain why the amount of net income differs from the amount of the ending Retained Earnings balance.

e. What are the balances in the revenue, expense, and dividend accounts on January 1, 2017?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...