The following financial statement information is from five separate companies: 1

Question

The following financial statement information is from five separate companies: 1-2A Computing missi information usin accounting know A1 P1 Company Company Company Company Company December 31, 2014 $55,000 $34,000 $24,000 $60,000 19,000 21,500 9,000 December 31, 2015 Assets... 58000 26.500 113.000 70,000 29,000 During year 2015 9,750 6.500 20,000 11,000 1,400 8.500 3.500 14,000 Net income (loss) Owner cash withdrawals 40 Chapter 1 Accounting in Business 1. Answer the following questions about Company A: a. What is the amount of equity on December 31, 2014? b. What is the amount of equity on December 31, 2015? c. What is the amount of liabilities on December 31, 2015? Check (1l $41,500 2. Answer the following questions about Company B: a. What is the amount of equity on December 31, 2014? b. What is the amount of equity on December 31, 2015? c. What is net income for year 2015? 2c) $1,600 3. Calculate the amount of assets for Company C on December 31, 2015. 4. Calculate the amount of owner investments for Company D during year 2015. 5. Calculate the amount of liabilities for Company E on December 31, 2014. (3) $55,875

Explanation / Answer

Equity, December 31, 2014

31-Dec-14

Calculation of Assets of 2015

31-Dec-14

31-Dec-15

31-Dec-15

31 December 2014

Solution: 1.a. Company A Equity on December 31, 2014 is $30,500 Working Notes: Assets = Liabilities + Equity $55,000 = $24,500 + $30,500 Assets = Liabilities + Equity Hence Equity = Assets - Liabilities =$55,000 - $24,500 =$30,500 1.b. Company A Equity on December 31, 2015 is $41,500 Working Notes: Equity, December 31, 2014 $30,500 Add: Net income 2015 8,500 Add: Stock issuances 6,000 Sub total 45000 Less: Dividends 3,500 Equity, December 31, 2015 $41,500 1.c. Company A liabilities on December 31, 2015 is $16,500 Working Notes: Assets = Liabilities + Equity $58,000 = $16,500 + $41,500 Assets = Liabilities + Equity Hence Liabilities = Assets - Equity =$58,000 - $41,500 =$16,500 2.a. Company B Equity on December 31, 2014 is $12,500 Working Notes: Assets = Liabilities + Equity $34,000 = $21,500 + $12,500 Assets = Liabilities + Equity Hence Equity = Assets - Liabilities =$34,000 - $21,500 =$12,500 2.b. Company B Equity on December 31, 2015 is $13,500 Working Notes: Assets = Liabilities + Equity $40,000 = $26,500 + $13,500 Assets = Liabilities + Equity Hence Equity = Assets - Liabilities =$40,000 - $26,500 =$13,500 2.c. Company B net income for year 2015 = $1,600

Equity, December 31, 2014

$12,500 Add: Net income for 2015 1,600 Balancing figure Add: Stock issuances 1,400 15500 Less: Dividends 2,000 Equity, December 31, 2015 $13,500 in other way you can see Net Income for 2015 = Equity for 2015 - Stock issuances in 2015 + Dividend paid in 2015 - Equity for 2014   = $13,500 -1,400 + 2,000 - 12,500 = $1,600 3. Assets for Company C on December 31, 2015 = $55,875 Working Notes: First step Calculation of Equity on 31 December 2014

31-Dec-14

Assets = Liabilities + Equity $24,000 = $9,000 + $15,000 2nd step Calculation of Equity of 2015 on 31 December Equity, December 31, 2014 $15,000 Add: Net income 8,000 Add: Stock issuances 9,750 32750 Less: Dividends 5,875 Equity, December 31, 2015 $26,875 3rd Step

Calculation of Assets of 2015

Assets = Liabilities + Equity 55875 = $29,000 + $26,875 4. Owner investments for Company D during 2015 = $27,000 Working Notes: First step Calculation of Equity on 31 December 2014

31-Dec-14

Assets = Liabilities + Equity $60,000 = $40,000 + $20,000 2nd step Calculation of Equity on 31 December 2015

31-Dec-15

. = Liabilities + Equity $85,000 = $24,000 + $61,000 3rd Step Calculation of Owner investment of 2015 on 31 December Equity, December 31, 2014 $20,000 a Add: Net income 14,000 b Add: Stock issuances 27,000 c=d-a-b Less: Dividends 0 Equity, December 31, 2015 $61,000 d 5. Liabilities for Company E on December 31, 2014 is $91,500 Working Notes: First step Calculation of Equity on 31 December 2015

31-Dec-15

Assets = Liabilities + Equity $113,000 = $70,000 + $43,000 a b c=a-b 2nd step Calculation of Equity of 2014 on 31 December Equity, December 31, 2014 $27,500 a=e+d-c-d Add: Net income 20,000 b Add: Stock issuances 6,500 c Less: Dividends 11,000 d Equity, December 31, 2015 $43,000 e 3rd Step Calculation of Equity on 31 December 2014

31 December 2014

Assets = Liabilities + Equity $119,000 = $91,500 + $27,500 a b=a-c c Please feel free to ask if anything about above solution in comment section of the question.

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