As of December 31, 2013, Zip Express Company had total assets of $80,000, total liabilities of $20,000, and common stock of $25,000.
Required:
a. Determine the amount of retained earnings as of December 31, 2013, after closing.
b. Explain the difference between common stock and retained earnings.
c. On January 1, 2014, Zip Express raised $50,000 by issuing additional common stock. Immediately after the additional capital was raised, Zip Express reported total equity of $110,000.
Are the stockholders of Zip Express in a better financial position than they were on December 31, 2013?