Concept explainers
Financial Statement:
The Financial statement is the part of
The assets, liabilities and equity relation, are known as the accounting equation. Assets are the resources of company and that increase as business expand whereas liabilities are the burden on company that has to pay in future; Equity means the owner claim on assets. An accounting equation represent the assets of the company are equal to the liabilities and equity of the company.
In can be represented as follow,
Assets:
Assets are the resources that a company needs to run the business. An asset is economic resources of the company.
Liabilities:
Liabilities are generally the amount owned by the company from lenders, suppliers, or bank. Liabilities are the burden on the company that they have to pay to others.
Equity:
The Company needs finance to run the business. Equity is one of the method through which the company raise the capital.
Net Income:
Total earning of the company is called net income of the company. When the total expense deducted from the total revenue than the resultant is net income or ne loss.Net profit of the company is also called net profit. The investor can take a decision on the basis of net income of the company. If net income is more the investor attract to the company.
1.
a.
To compute: The amount of equity, of V Company as on December 31, 2016.
Explanation of Solution
Given,
The amount of assets is $54,000.
The amount of liabilities is $25,000.
Formula to calculate equity is,
Substitute$54,000 for assets and $25,000 for liabilities.
Hence, the amount of equity of V Company as on December 31, 2016 is $29,000.
b.
To compute: The amount of equity, of V Company as on December 31, 2017.
b.
Explanation of Solution
Given,
The amount of assets is $59,000.
The amount of liabilities is $36,000.
Formula to calculate equity is,
Substitute$59,000 for assets and $36,000 for liabilities.
Hence, the amount of equity of V Company as on December 31, 2017 is $23,000.
c.
To compute: The amount of net income or loss of V Company as on December 31, 2017.
c.
Explanation of Solution
Given,
The amount of equity is $29,000 of December 31, 2016.
The amount of equity is $23,000 of December 31, 2017.
Stock issuance is $5,000.
Cash dividend is $5,500.
Formula to calculate net income is,
Substitute $29,000 for equity in the beginning, $5,000 for issue of stock, $23,000 for equity at the end, $5,500 for dividend.
Hence, the net loss of V Company as on December 31, 2017 is $5,500.
d.
To compute: The amount of equity, of W Company as on December 31, 2016.
d.
Explanation of Solution
Given,
The amount of assets is $80,000.
The amount of liabilities is $60,000.
Formula to calculate equity is,
Substitute$80,000 for assets and $60,000 for liabilities.
Hence, the amount of equity of W Company as on December 31, 2016 is $20,000.
e.
To compute: The amount of equity, of W Company as on December 31, 2017.
e.
Explanation of Solution
Given,
The amount of assets is $100,000.
The amount of equity is $20,000.
Stock issuance is $20,000.
Net income is $40,000.
Cash dividend is $2,000.
Formula to calculate equity is,
Substitute $20,000 for equity in the beginning,, $20,000 for issue of stock, $40,00 for net income, $2,000 for dividend.
Hence, the amount of equity of W Company as on December 31, 2017 is $78,000.
f.
To compute: The amount of liabilities, of A Company as on December 31, 2017.
f.
Explanation of Solution
Given,
The amount of assets is $100,000.
The amount of equity is $78,000.
Formula to calculate liabilities is,
Substitute$100,000 for assets and $78,000 for equity.
Hence, the amount of liabilities of W Company as on December 31, 2017 is $22,000.
g.
To compute: The amount of stock issuance, of X Company as on December 31, 2017.
g.
Explanation of Solution
Given,
The amount of equity is $73,000 of December 31, 2016.
The amount of equity is $120,700 of December 31, 2017.
Net income is $18,500.
Formula to calculate stock issuance is,
Substitute $73,000 for equity in the beginning, $18,500 for net income, $120,700 for equity at the end.
Working Notes:
Calculation of the amount of equity as on December 31, 2016,
Calculation of the amount of equity as on December 31, 2017,
Hence, the amount of stock issuances of X Company as on December 31, 2017 is $29,200.
h.
To compute: The amount of assets, of Y Company as on December 31, 2017.
h.
Explanation of Solution
Given,
The amount of liabilities is $42,000 as on December 31, 2017.
The amount of equity is $93,100 as on December 31, 2017
Formula to calculate assets is,
Substitute$42,000 for liabilities and $93,100 for equity.
Working notes:
Calculation of the amount of equity as on December 31, 2016,
Calculation of the amount of equity as on December 31, 2017,
Hence, the amount of asset of Y Company as on December 31, 2017 is $135,100.
i.
To compute: The amount of liabilities, of Z Company as on December 31, 2016.
i.
Explanation of Solution
Given,
The amount of assets is $114,000 as on December 31, 2016.
The amount of equity is $44,000 as on December 31, 2016.
Formula to calculate equity is,
Substitute$119,000 for assets and $27,500 for equity.
Working Notes:
Calculation of the amount of equity as on December 31, 2017,
Calculation of the amount of equity as on December 31, 2016,
Hence, the amount of liabilities of Z Company as on December 31, 2016 is $70,000.
Want to see more full solutions like this?
Chapter 1 Solutions
FINANCIAL ACCT.FUND.(LOOSELEAF)
- Question 1The following information was extracted from the financial statement of Barryfor the year ended 31 December 2020. RMSales 437,500Opening inventories 17,500Closing inventories 26,250Cost of sales 262,500Other income 3,750Expenses 61,250Current liabilities 47,250Trade receivables 39,375Bank 8,750Cash 31,500 (b) Calculate the following ratios of Barry Sdn Bhd for the year ended 31December 2020. (iv) Inventories turnover days(v) Trade receivables turnover daysarrow_forwardACCT101 FALL 2020-2021 Collection of an R.O 1500 Accounts Receivable. The effect on the components of the basic accounting equation of the Company is: Select one: a. Decreases a liability R.O 1500; increases owner's equity R.O 1500. O b. Increases an asset R.O 1500; decreases an asset R.O 1500. c. Increases an asset R.O 1500; decreases a liability R.O 1500. O d. Decreases a liability R.O 1500; decreases a liability R.O 1500. e. Decreases an asset R.O 1500; decreases a liability R.O 1500. Nextagearrow_forwardQuestion 1 The following are financial statements of Crane Company. Crane CompanyIncome StatementFor the Year Ended December 31, 2022 Net sales $2,192,500 Cost of goods sold 1,010,500 Selling and administrative expenses 900,500 Interest expense 78,000 Income tax expense 62,500 Net income $ 141,000 Crane CompanyBalance SheetDecember 31, 2022 Assets Current assets Cash $ 55,100 Debt investments 89,000 Accounts receivable (net) 168,400 Inventory 236,500 Total current assets 549,000 Plant assets (net) 572,500 Total assets $ 1,121,500 Liabilities and Stockholders’ Equity Current liabilities Accounts payable $ 152,000 Income taxes payable 31,000 Total current liabilities 183,000 Bonds payable 220,740 Total liabilities 403,740 Stockholders’ equity Common stock 345,000 Retained earnings 372,760…arrow_forward
- The balance sheet of Ipod Corporation on December 31, 2024: Cash Ipod Corporation BALANCE SHEET AS OF DECEMBER 31, 2024 Accounts and notes receivable Inventory Select one: O a $15,500 O b. $19,700 OC $2.300 O d. $10,300 Oe. $15,800 Show Transcribed Text Accounts and notes payable Common stock 4 Retained earnings Liabilities and Capital 3 Assets Accounts and notes receivable Inventory Accounts and notes payable Common stock Retained earnings C Liabilities and Capital $ 40,000 30,000 These errors were made by Ipod on December 31, 2023 and were not corrected: ending inventory understated $2,400, unearned revenue of $2.100 omitted. On December 31, 2024, accrued revenue of $4,000 was omitted, and accrued expense of $1,400 was omitted The net income shown by the books for 2024 was $13,200. The correct 2024 Net Income is: 90.000 $160.000 $ 20,000 100,000 40.000 $160.000 30,000 90.000 $160.000 $ 20,000 100,000 40.000 $160.000 These errors were made by Ipod on December 31, 2023 and were not…arrow_forwardQuestion 14 (1 point) Consider the following information about operations of a business for the period ending December 31, 2021. Account Title Amount Account Title Amount Cost of Goods Sold $235,500 Sales $450,000 3,000 General and Administrative Expenses 70,000 Sales Discounts Selling Expenses 65,000 Sales Returns and Allowances 3,500 Gross Profit amounts to O $193,500 $450,000 O $208,000 $209,500 148 W MAY 8.arrow_forwardQuestion 8 ABC Company's balance sheets for 2027 appear below: Jan. 1 Dec. 31 ASSETS: Cash Accounts receivable Inventory Land LIABILITIES + EQUITY: Accounts payable Total Notes payable Common stock Retained earnings Total Sales revenue Cost of goods sold Other expenses Net income 1. 24,600 98,300 21,700 32,500 177,100 2. 29,400 0 88,600 59,100 177,100 31,200 ? ABC Company's income statement for 2027 is below: 646,780 473, 750 102,390 70,640 ? ? ? 46,300 35,000 63,700 ? Additional information: ABC Company's accounts receivable turnover ratio for 2027 was 7.3. The note payable was a bank loan taken out on March 1, 2027. The bank loan is due on November 30, 2028. 3. ABC Company's number of days' sales in inventory ratio for 2027 was 29.2 days. Calculate ABC Company's working capital at December 31, 2027.arrow_forward
- QUESTION 1 The following debtor control account and debtors list were prepared by the owner of Siyadula Traders. The owner is unsure if he has correctly prepared it. REQUIRED: Jse the following information to prepare the correct account and list: Debtors control account for January 2021 Debtors list at 31 January 2021. General Ledger DEBTORS CONTROL ACCOUNT Jan 01 Balance b/d 54 300 Jan 31 Bank and discount CRJ5 36 200 Sales Returns SRJ 6 200 Sales SJ 62 110 Balance c/d 37 810 98 310 98 310 Feb 01 Balance b/d 37 810 Debtors List as at 31 January 2021 Debit Credit B. Afleck 12 525 M. Damon 19 085 J. Peter 18 100 A. Paul 9 200 D. Carter 17 900 76 810arrow_forwardQUESTION 4 The following information relates to Beethoven Ltd for the year ended 30th June 2022: BEETHOVEN LTD Statement of Financial Performance as at 30 June 2022 2022 2021 $ $ Assets Current Assets Cash at bank 67,710 59,666 Accounts receivable 252,760 283,290 Inventory 1,107,600 951,400 Prepaid expenses 113,600 35,500 Total current assets 1,541,670 1,329,856 Non-current assets Equipment 1,263,800 823,600 Accumulated depreciation – equipment (238,560) (143,136) Total non-current assets 1,025,240 680,464 Total Assets 2,566,910 2,010,320 Liabilities Current Liabilities Accounts payable 348,916 391,940 Accrued…arrow_forwardSimple Accounting – Balance Sheet. Assets Liabilities Shareholders' Equity $567,005.00 $389,055.00 O a. $567,005.00 O b. $389,055.00 O c. $177,950.00 O d. $744,955.00arrow_forward
- Current Attempt in Progress Your examination of the records of a company that follows the cash basis of accounting tells you that the company's reported cash- basis earnings in 2022 are $30,500. If this firm had followed accrual-basis accounting practices, it would have reported the following year-end balances. 2022 $3,800 Accounts receivable Supplies on hand Unpaid wages owed 2,160 2,340 Other unpaid expenses 1.430 1.340 2021 $2,900 1,380 1.550 Determine the company's net earnings on an accrual basis for 2022. Net earnings on an accrual basis for 2022 sarrow_forwardCompany A Company B Net credit sales, Dec. 31, 2019 Net accounts receivable, Dec. 31, 2018 Net accounts receivable, Dec. 31, 2019 Number of days' sales in receivables ratio, 2018 Net income, Dec. 31, 2018 $540,000 $120,000 $180,000 103 days $250,000 $620,000 $145,000 $175,000 110 days $350,000 Additional Information: • Company A: Bad debt estimation percentage using the income statement method is 6%, and the balance sheet method is 10%. The $230,000 in Other Expenses includes all company expenses except Bad Debt Expense. • Company B: Bad debt estimation percentage using the income statement method is 6.5%, and the balance sheet method is 8%. The $140,000 in Other Expenses includes all company expenses except Bad Debt Expense. B. On an Excel spreadsheet, answer the following questions below: 1. Compute the number of days' sales in receivables ratio for each company for 2019 and interpret the results (round answer to nearest whole number) point). 2. If Company A changed from the income…arrow_forwardQuestion 3 The accountant of Hanoi Traders completed the subsidiary journals for the entity. Extracts from the subsidiary journals of Hanoi Traders for March 2022 are as follows: Creditors Journal - March 2022 Creditors control Trading stock Debtors Journal - March 2022 Sales Cost of sales R36 000 R96 350 R89 000 Cash Receipts Journal - March 2022 Bank Sales Debtors control Cost of sales Other Balances as at 1 March 2022 Bank Debtors control R45 000 Debtors allowances Cost of sales ?? R56 250 R23 815 R45 000 R128 640 Creditors Allowances Journal - March 2022 Creditors control R3 800 R53 880 R37 539 Trading stock R3 000 Debtors Allowances Journal - March 2022 6 200 4 960 Cash Payments Journal - March 2022 Bank Trading stock Creditors control Balance as at 1 March 2022 Creditors control R168 259 R65 400 R36 000 R48 951 Required: Post the above journals to the following General Ledger accounts and balance the accounts: 3.1. Bank account 3.2. Debtors control account 3.3. Creditors control…arrow_forward
- Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage LearningFinancial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning