Financial Accounting: Tools for Business Decision Making, 8th Edition
Financial Accounting: Tools for Business Decision Making, 8th Edition
8th Edition
ISBN: 9781118953808
Author: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
Publisher: WILEY
bartleby

Videos

Question
Book Icon
Chapter 1, Problem 1.9BE

(a)

Accounting Equation: It is the mathematical equation that shows the relation between assets, liabilities and stockholders’ equity. It shows that assets balances the liabilities / stockholders’ equity.  It is expressed as:

Accounting Equation

images

Figure (1)

To determine

The amount of stockholders’ equity at the end of the year. Follow the below equation to determine the value of stockholders’’ equity:

(a)

Accounting Equation: It is the mathematical equation that shows the relation between assets, liabilities and stockholders’ equity. It shows that assets balances the liabilities / stockholders’ equity.  It is expressed as:

Accounting Equation

images

Figure (1)

Expert Solution
Check Mark

Answer to Problem 1.9BE

Stockholders’ Equity=AssetsLiabilities

Total assets at the end of the year = $950,000 (1)

Total liabilities at the end of the year = $420,000 (2)

Determine the amount of stockholders’ equity at the end of the year.

Stockholders' equity at the end of the year}=[Total assets at the end of the yearTotal liabilities at the end of the year]=$950,000$420,000=$530,000

Working Notes:

Determine the amount of total assets at the end of the year.

Total assets at theend of the year}=[Total assets at the beginning of the year+Total assets increased during the year]=$800,000+$150,000=$950,000 (1)

Determine the amount of total liabilities at the end of the year.

Total liabilites at theend of the year}=[Total liabilitesat the beginning of the yearTotal liabilites decreased during the year]=$500,000$80,000=$420,000 (2)

Explanation of Solution

To determine the total stockholder’s equity, first determine total assets and total liabilities at the end of the year. Total assets at the end of the year are determined by adding the total assets at the beginning of the year, and total assets increased during the year. Then total liabilities are determined by deducting the total liabilities at the beginning of the year, and total liabilities decreased during the year.

Conclusion

Therefore, the stockholders’ equity at the end of the year of Company M is $530,000.

(b)

To determine

The amount of total assets at the end of the year. Follow the below equation to determine the value of assets:

(b)

Expert Solution
Check Mark

Answer to Problem 1.9BE

Assets=Stockholders’ Equity+Liabilities

Total stockholders’ equity at the end of the year = $230,000 (3)

Total liabilities at the end of the year = $600,000 (4)

Determine the amount of total assets at the end of the year.

Total assets at theend of the year}=[Stockholders' equity at the end of the year+Total liabilites at the end of the year]=$230,000+$600,000=$830,000

Working Notes:

Determine the amount of stockholders’ equity at the beginning of the year.

Stockholders' equity atthe beginning of the year}=[Total assets at the beginning of the yearTotal liabilities at the beginning of the year]=$800,000$500,000=$300,000 (a)

Determine the amount of total stockholders’ equity at the end of the year.

Stockholders' equity at the end of the year}=[Stockholders' equity at the beginning of the yearDecrease in stockholders' equity during the year]=$300,000(a)$70,000=$230,000 (3)

Determine the amount of total liabilities at the end of the year.

Total liabilites at theend of the year}=[Total liabilites at the beginning of the year+Total liabilites increased during the year]=$500,000+$100,000=$600,000 (4)

Explanation of Solution

To determine the total assets, first determine total stockholders’ equity and total liabilities at the end of the year. Total stockholders’ equity at the end are determined by deducting the beginning stockholders’ equity of the year and decreased stockholders’ equity during the year. Then total liabilities are determined by adding the total liabilities at the beginning of the year and total liabilities increased during the year.

Conclusion

Therefore, the total asset at the end of the year of Company M is $830,000.

(c)

To determine

The amount of total liabilities at the end of the year. Follow the below equation to determine the value of liabilities:

(c)

Expert Solution
Check Mark

Answer to Problem 1.9BE

Liabilities=AssetsStockholders’ Equity

Total assets at the end of the year = $720,000 (5)

Total stockholders’ equity at the end of the year = $410,000 (6)

Determine the amount of total liabilities at the end of the year.

Total liabilities at theend of the year}=[Total assets at the end of the yearStockholders' equity at the end of the year]=$720,000$410,000=$310,000

Working Notes:

Determine the amount of stockholders’ equity at the beginning of the year.

Stockholders' equity atthe beginning of the year}=[Total assets at the beginning of the yearTotal liabilities at the beginning of the year]=$800,000$500,000=$300,000 (a)

Determine the amount of total assets at the end of the year.

Total assets at theend of the year}=[Total assets at the beginning of the yearDecrease in total assets during the year]=$800,000$80,000=$720,000 (5)

Determine the amount of stockholders’ equity at the end of the year.

Stockholders' equity at the end of the year}=[Stockholders' equity at the beginning of the year+Increase in stockholders' equity during the year]=$300,000(a)+$110,000=$410,000 (6)

Explanation of Solution

To determine the total liabilities, first determine total assets and total stockholders’ equity at the end of the year. Total assets at the end of the year are determined by deducting the total assets at the beginning of the year and total assets decreased during the year. Then total stockholders’ equity at the end are determined by adding the beginning stockholders’ equity of the year and increased stockholders’ equity during the year.

Conclusion

Therefore, the total liability at the end of the year of Company M is $310,000.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
At the beginning of the current fiscal year, the balance sheet for Davis Company showed liabilities of $288,000. During the year, labilmes decreased by $16,200, assets increased by $58,500, and paid-in capital increased from $27,000 to $172,800 Dividends declared and paid during the year were $22,500. At the end of the year, stockholders' equity totaled $386,100 Required: a. Calculate net income (or loss) for the year. Indicate the financial statement effect Complete this question by entering your answers in the tabs below. Required A1 Required A2 Calculate net income (or loss) for the year. Note: Enter decreases with a minus sign to indicate a negative financial statement effect. Beginning $599,000 Changes 58.500 Changes Ending S657,900 Stockholders' Equity Liabilities $ 280,000+ (16,200) RE 284,400 48.600 Not loss 22.500 [Dividends $271,800+ $ 172.800 $ 213,300 ($386,100 total SE) PIC $ 27,000+$ 145.800+
the income statement for Stretch-Tape Corporation reports net sales of $439,900 and net income of $54,780. Average total assets for the year are $830,000. Stockholders’ equity at the beginning of the year was $530,000, and $23,000 was paid to stockholders as dividends during the year. There were no other stockholders’ equity transactions that occurred during the year.Required:Calculate the return on assets, profit margin, asset turnover, and return on equity ratios. (Round your answers to 1 decimal place.)     Profitability Ratios Return on assets 6.6 % Profit margin 12.5 % Asset turnover   times Return on equity   %
At the beginning of the current fiscal year, the balance sheet for Davis Co. showed liabilities of $640,000. During the year liabilities decreased by $36,000, assets increased by $130,000, and paid-in capital increased from $60,000 to $384,000. Dividends declared and paid during the year were $50,000. At the end of the year, stockholders' equity totaled $858,000. Calculate net income (or loss) for the year.

Chapter 1 Solutions

Financial Accounting: Tools for Business Decision Making, 8th Edition

Ch. 1 - Prob. 11QCh. 1 - What are the three main categories of the...Ch. 1 - Prob. 13QCh. 1 - Prob. 14QCh. 1 - Prob. 15QCh. 1 - Which of these items are liabilities of White...Ch. 1 - How are each of the following financial statements...Ch. 1 - What is the purpose of the management discussion...Ch. 1 - Prob. 19QCh. 1 - Prob. 20QCh. 1 - Prob. 21QCh. 1 - Prob. 1.1BECh. 1 - Match each of the following types of evaluation...Ch. 1 - Indicate in which part of the statement of cash...Ch. 1 - Prob. 1.4BECh. 1 - Prob. 1.5BECh. 1 - Prob. 1.6BECh. 1 - Indicate which statement you would examine to find...Ch. 1 - Prob. 1.8BECh. 1 - Prob. 1.9BECh. 1 - Prob. 1.10BECh. 1 - Prob. 1.11BECh. 1 - Prob. 1.1DIECh. 1 - Prob. 1.2DIECh. 1 - Prob. 1.3ADIECh. 1 - Prob. 1.3BDIECh. 1 - Here is a list of words or phi uses discussed in...Ch. 1 - Prob. 1.3ECh. 1 - Prob. 1.4ECh. 1 - Prob. 1.5ECh. 1 - Prob. 1.6ECh. 1 - Prob. 1.7ECh. 1 - Prob. 1.8ECh. 1 - Prob. 1.9ECh. 1 - Prob. 1.10ECh. 1 - Prob. 1.11ECh. 1 - Prob. 1.12ECh. 1 - Prob. 1.13ECh. 1 - Prob. 1.14ECh. 1 - Prob. 1.15ECh. 1 - Prob. 1.16ECh. 1 - Prob. 1.17ECh. 1 - Prob. 1.1APCh. 1 - Financial decisions often place heavier emphasis...Ch. 1 - Prob. 1.3APCh. 1 - Prob. 1.4APCh. 1 - Prob. 1.5APCh. 1 - Prob. 1.1EYCTCh. 1 - Prob. 1.2EYCTCh. 1 - Prob. 1.3EYCTCh. 1 - INTERPRETING FINANCIAL STATEMENTS Xerox was not...Ch. 1 - Prob. 1.5EYCTCh. 1 - Prob. 1.6EYCTCh. 1 - Prob. 1.7EYCTCh. 1 - Prob. 1.8EYCTCh. 1 - Prob. 1.9EYCTCh. 1 - Prob. 1.10EYCTCh. 1 - Prob. 1.1IFRSCh. 1 - Prob. 1.2IFRSCh. 1 - Prob. 1.3IFRS
Knowledge Booster
Background pattern image
Accounting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Text book image
Financial Accounting
Accounting
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Text book image
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Text book image
Intermediate Financial Management (MindTap Course...
Finance
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Cengage Learning
Text book image
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Earnings per share (EPS), basic and diluted; Author: Bionic Turtle;https://www.youtube.com/watch?v=i2IJTpvZmH4;License: Standard Youtube License