Lily company had the following assets and liabilities on the dates indicated: De
ID: 2385905 • Letter: L
Question
Lily company had the following assets and liabilities on the dates indicated:December 31 total assets total liabilities
2009 $400,000.00 $250,000.00
2010 $460,000.00 $300,000.00
2011 $590,000.00 $400,000.00
Lily began business on January 1, 2009 with an investment of $1000,00.00
Form an analysis of rhe change in owner's equity during rhe year, compute the net incom (or loss) for
a) 2009 assuming Lilys drawings were $15,000.00 for the year
b) 2010 assuming Lily made an additional investment of $50,000.00 and had no drawings in 2010
c) 2011 ASSUMING lILY MADE AN ADDITIONAL INVESTMENT OF $15,000.00 and had drawings of $30,000.00 in 2011.
Explanation / Answer
Dec 31...Total Assets...Total Liabs.......OE 2007......$400,000........$250,000....… 2008......$460,000........$300,000....… 2009......$590,000........$400,000....… 1.1.07 Assets = Liabs + OE $100k = $0 + $100k (a) net income (or loss) for 2007, assuming Lily's drawings were $15,000 for the year. OE increased from $100k to $150k, ie. an increase of $50k, but this is after drawings of $15,000, so net income was $65,000 (b) net income (or loss) for 2008, assuming Lily made an additional investment of 50,000 and had no drawings in 2008 OE increased from $150k to $160k, ie. $10,000, but this is after add'l investment of $50k, so net income was actually a loss ($40,000) c)net income (or loss) for 2009, assuming Lily made an additional investment of $15,000 and had drawings of $30,000 in 2009 OE increased from $160k to $190k, ie. $30k but this is after additional investment of $15,000 and drawings of $30,000, so net income was $45,000.
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