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File Edit View History Bookmarks People Window Help Checkout Connect Secure https/inewconnect.mheducation.com/flow/connect.html lackboard Learn MGmail Apple Cloud Cengage FIN 331 FacebookwitterYahoo! News HW1-2 Saved 4 1. Use the accounting equation to compute the missing financial statement amounts. 10 points any Assets LiabilitiesEquity 40,000 $70,000 $ 75,000! 25,000 I s 85,000|-| $ 20.0001. eBook 2. Use the expanded accounting equation to compute the missing financial statement amounts Company AssetsLiabilities + Dividends+RevenuesExper Stock 40,000$ 16,000 20,000-$ $ 80,000-S 32,000| + | S 44,000|- 24,000Explanation / Answer
1) Company Assets = Liabilities + Equity 1 $ 75,000 = $ 35,000 + $ 40,000 2 $ 95,000 = $ 25,000 + $ 70,000 3 $ 85,000 = $ 20,000 + $ 65,000 Working: Company 1: Liabilities = Assets - Equity = $ 75,000 - $ 40,000 = $ 35,000 Company 2: Assets = Liabilities + Equity = $ 25,000 + $ 70,000 = $ 95,000 Company 3: Equity = Assets - Liabilities = $ 85,000 - $ 20,000 = $ 65,000 2) Company Assets = Liabilities + Common Stock - Dividends + Revenue - Expense 1 $ 40,000 $ 16,000 $ 20,000 0 $ 12,000 $ 8,000 2 $ 80,000 $ 32,000 $ 44,000 $ 2,000 $ 24,000 $ 18,000 Working: Company 1: a. Equity = Assets - Liabilities = $ 40,000 - $ 16,000 = $ 24,000 b. Retained Earning = Equity-Common Stock = $ 24,000 - $ 20,000 $ 4,000 c. Since dividend is 0. net income is the retained earnig. Revenue = Net Income + Expenses = $ 4,000 + $ 8,000 = $ 12,000 Company 2: a. Equity = Assets - Liabilities = $ 80,000 - $ 32,000 = $ 48,000 b. Retained Earning = Equity-Common Stock = $ 48,000 - $ 44,000 $ 4,000 c. Net Income = Revenue - Expense = $ 24,000 $ 18,000 = $ 6,000 d. Dividend = Net Income - Retained earning = $ 6,000 - $ 4,000 = $ 2,000
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