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1.
Introduction:Balance sheet is a financial statement which is prepared at the end of an accounting year to show the balance of assets, liabilities and the equity of the company. The assets of the company are equal to the amount of liabilities plus equity.
To calculate:
(a) The amount of equity for company A on December 31, 2015.
(b) The amount of equity for company A on December 31, 2016
(c) The amount of liabilities for company A on December 31, 2016.
1.
Explanation of Solution
(a)
December 31, 2015:
Assets: $55,000
Liabilities: $24,500
Therefore, the amount of beginning equity is $30,500.
(b)
December 31, 2016:
| Particular | Amount ($) |
| Beginning balance of equity | 30,500 |
| Add: stock insurance | 6,000 |
| Add: net income | 8,500 |
| Less: Cash dividend | (3,500) |
| Ending balance of equity | 41,500 |
Therefore, the amount of ending equity is $41,500.
(c)
Liabilities on December 31, 2016:
Assets: $58,000
Equity: $41,500
Therefore, the amount of liabilities is $16,500.
2.
Introduction:Balance sheet is a financial statement which is prepared at the end of an accounting year to show the balance of assets, liabilities and the equity of the company. The assets of the company are equal to the amount of liabilities plus equity.
To calculate: (a) The amount of equity for company B on December 31, 2015. (b) The amount of equity for company B on December 31, 2016 (c) The net income of company B for the year ending on December 31, 2016.
2.
Explanation of Solution
(a)
December 31, 2015:
Assets: $34,000
Liabilities: $21,500
Therefore, the amount of beginning equity is $12,500.
(b)
December 31, 2015:
Assets: $40,000
Liabilities: $26,500
Therefore, the amount of ending equity is $13,500.
(c)
The amount of net income for year 2016:
| Particular | Amount ($) |
| Ending balance of equity | 13,500 |
| less: beginning balance of equity | (12,500) |
| Less: stock insurance | (1,400) |
| Add: Cash dividend | 2,000 |
| Net income | 1,600 |
Therefore, net income for the year 2016 is $1,600.
3.
Introduction:Balance sheet is a financial statement which is prepared at the end of an accounting year to show the balance of assets, liabilities and the equity of the company. The assets of the company are equal to the amount of liabilities plus equity.
To calculate: The amount of assets for company C on December 31, 2016.
3.
Explanation of Solution
The amount of assets on December 31, 2016:
Beginning equity is calculated as:
Assets: $24,000
Liabilities: $9,000
Therefore, the amount of beginning equity is $15,000.
Ending equity is calculated as:
| Particular | Amount ($) |
| Beginning balance of equity | 15,000 |
| Add: stock insurance | 9,750 |
| Add: net income | 8,000 |
| Less: Cash dividend | (5,875) |
| Ending balance of equity | 26,875 |
Therefore, the amount of ending equity is $26,875.
Assets on December 31, 2016:
Liabilities: $29,000
Ending equity: $26,875
Therefore, amount of assets is $55,875.
4.
Introduction:Balance sheet is a financial statement which is prepared at the end of an accounting year to show the balance of assets, liabilities and the equity of the company. The assets of the company are equal to the amount of liabilities plus equity.
To calculate: The amount of stock insurance for company D on December 31, 2016.
4.
Explanation of Solution
The amount of stock insurance on December 31, 2016:
Beginning equity is calculated as:
Assets: $60,000
Liabilities: $40,000
Therefore, the amount of beginning equity is $20,000.
Ending equity is calculated as:
Assets: $85,000
Liabilities: $24,000
Therefore, the amount of ending equity is $61,000.
Stock insurance is calculated as:
| Particular | Amount ($) |
| Ending balance of equity | 61,000 |
| less: beginning balance of equity | (20,000) |
| Less: net income | (14,000) |
| Add: Cash dividend | 0 |
| Stock insurance | 27,000 |
Therefore, the amount of stock insurance is $27,000.
5.
Introduction:Balance sheet is a financial statement which is prepared at the end of an accounting year to show the balance of assets, liabilities and the equity of the company. The assets of the company are equal to the amount of liabilities plus equity.
To calculate: The amount of liabilities for company E on December 31, 2015.
5.
Explanation of Solution
The amount of liabilities on December 31, 2015:
Ending equity is calculated as:
Assets: $113,000
Liabilities: $70,000
Therefore, the amount of ending equity is $43,000.
Beginning equity is calculated as:
| Particular | Amount ($) |
| Ending balance of equity | 43,000 |
| Add: cash dividend | 11,000 |
| Less: net income | (20,000) |
| Less: stock insurance | (6,500) |
| Beginning balance of equity | 27,500 |
Therefore, the amount of beginning equity is $27,500.
Liabilities on December 31, 2015:
Assets: $119,000
Beginning equity: $27,500
Therefore, amount of liabilities is $91,500.
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Chapter 1 Solutions
Connect Access Card for Financial Accounting: Information and Decisions
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