Fulton Company Was Established at the Beginning of 2014 When

question 58

Essay

Fulton Company was established at the beginning of 2014 when several investors paid a total of $200,000 to purchase Fulton common stock. No additional investments in common stock were made during the year. By December 31, 2014, Fulton had cash on hand of $45,000, office equipment of $40,000, inventory of $156,000, and accounts payable of $10,000. Sales for the year were $812,000. Of this amount, customers still owed $20,000. Fulton paid dividends of $25,000 to its stockholders during 2014.
Requirements:
1. Based on the information above, prepare a balance sheet for Fulton Company as of December 31, 2014. In the process of preparing the balance sheet, you must calculate the ending balance in retained earnings.
2. Prepare a statement of stockholders' equity for the year ended December 31, 2014.
3. What was the amount of Fulton's net income for 2014?
4. Was Fulton successful during its first year in operation? Explain your answer.

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Definitions:

Broad Average

A general or wide-ranging statistical measure that represents the typical value of a set of numbers or quantities.

IQ Score

An IQ score is a standardized measure of human intelligence and cognitive abilities, based on a series of tests that compare individual performance to age-group norms.

Binet-Simon Scale

Historically significant intelligence test developed by Alfred Binet and Théodore Simon, serving as a basis for modern IQ testing by measuring various cognitive abilities.

Mental Age

A measure of an individual's mental attainment based on the average age at which normal individuals achieve a particular score on a test of intelligence or cognitive ability.