Identify the missing amounts for the given companies, by the letters.
Explanation of Solution
Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.
Balance sheet: This financial statement reports a company’s resources (assets) and claims of creditors (liabilities) and stockholders (stockholder’s equity) over those resources. The resources of the company are assets which include money contributed by stockholders and creditors. Hence, the main elements of the balance sheet are assets, liabilities, and
a.
Calculate the additional investment of Company F:
Particulars | Amount ($) |
Stockholders’ equity at end of year (1) | $930,000 |
Stockholders’ equity at beginning of year (2) | $540,000 |
Increase in stockholders’ equity | $390,000 |
Deduct increase due to net income (3) | $330,000 |
Increase due to additional investments less withdrawals | $60,000 |
Add withdrawals | $75,000 |
Additional common stock issued | $135,000 |
Table (1)
The additional investment of Company F is $135,000.
Working note (1):
Calculate the Stockholders’ equity for Company F at end of year:
The stockholder's equity for Company F at the end of the year for is $930,000.
Working note (2):
Calculate the Stockholders’ equity for Company F at beginning of year:
The stockholder's equity for Company F at the beginning of the year is $540,000.
Working note (3):
Calculate the Net income for Company F during the year:
The net income of Company F during the year is $330,000.
b.
Calculate the revenue of Company H:
Particulars | Amount ($) |
Stockholders’ equity at end of year (4) | $455,000 |
Stockholders’ equity at beginning of year (5) | $230,000 |
Increase in stockholders’ equity | $225,000 |
Add: Withdrawals | $32,000 |
Increase due to additional investment and net income | $257,000 |
Deduct: Additional investment | $150,000 |
Increase due to Net income | $107,000 |
Add expenses | $128,000 |
Revenue | $235,000 |
Table (2)
The revenue of Company H is $235,000.
Working note (4):
Calculate the Stockholders’ equity at end of year for Company H:
The stockholder's equity for Company H at the end of the year is $455,000.
Working note (5):
Calculate the Stockholders’ equity for Company H at beginning of year:
The stockholder's equity for Company H at the beginning of the year is $230,000.
c.
Calculate the withdrawals from Company J:
Particulars | Amount ($) |
Stockholders’ equity at end of year (6) | $20,000 |
Stockholders’ equity at beginning of year (7) | $34,000 |
Decrease in stockholders’ equity | (-) $14,000 |
Add decrease due to net loss (8) | $7,500 |
Decrease due to withdrawals less additional investment | ($6,500) |
Deduct additional investment | $10,000 |
Withdrawals from the business | (-) $16,500 |
Table (3)
The withdrawals from Company J are $16,500.
Working note (6):
Calculate the Stockholders’ equity for Company J at end of year:
The stockholder's equity for Company J at the end of the year for is $20,000.
Working note (7):
Calculate the Stockholders’ equity for Company J at beginning of year:
The stockholder's equity for Company J at the beginning of the year is $34,000.
Working note (8):
Calculate the net loss for Company J during the year:
The net loss of Company J during the year is $7,500.
d.
Calculate the assets of Company R in beginning of the year:
Particulars | Amount ($) |
Stockholders’ equity at end of year (9) | $134,000 |
Add decrease due to net loss (10) | $13,000 |
Add withdrawals | $39,000 |
Owner's equity in the beginning plus additional investment | $186,000 |
Deduct Additional investment | $55,000 |
Stockholders’ equity at beginning | $131,000 |
Add liabilities at the beginning of year | $120,000 |
Assets at the beginning of the year | $251,000 |
Table (4)
The assets of Company R in beginning of the year are $251,000.
Working note (9):
Calculate the Stockholders’ equity at end of year for Company R:
The stockholder's equity for Company R at the end of the year is $134,000.
Working note (10):
Calculate the net loss for Company R during the year:
The net loss of Company R during the year is $13,000.
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Chapter 1 Solutions
FINANCIAL & MANAGERIAL ACCW/CENGAGENOWV
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