Fulton Company Was Established at the Beginning of 2010 When

question 11

Essay

Fulton Company was established at the beginning of 2010 when several investors paid a total of $200,000 to purchase Fulton stock.No additional investments in stock were made during the year.By December 31,2010,Fulton had cash on hand of $45,000,office equipment (net)of $40,000,inventories 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 2010.
Requirements:
1.Based on the information above,prepare a balance sheet for Fulton Company as of December 31,2010.In the process of preparing the balance sheet,you must calculate the ending balance in retained earnings.
2.Prepare a statement of retained earnings for the year ended December 31,2010.
3.What was the amount of Fulton's net income for 2010?
4.Was Fulton successful during its first year in operation?

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Definitions:

Profit-Maximizing

A strategy or approach aimed at achieving the highest possible profit from business operations.

Edited and Typeset

The process of making textual corrections, formatting, and arranging material for publication in a visually appealing and consistent manner.

Marginal Cost

The upsurge in comprehensive cost due to the fabrication of one more unit of a good or service.

Profits

The financial gain obtained when the revenues generated from business activities exceed the expenses, costs, and taxes needed to sustain those activities.