Concept explainers
The assets, liabilities and equity relation, are known as the accounting equation. Assets are the resources of company and that increase as business expand whereas liabilities are the burden on company that has to pay in future; Equity means the owner claim on assets. An accounting equation represent the assets of the company are equal to the liabilities and equity of the company.
In can be represented as follow,
Net Income:
Total earning of the company is called net income of the company. When the total expense deducted from the total revenue than the resultant is net income or ne loss.Net profit of the company is also called net profit. The investor can take a decision on the basis of net income of the company. If net income is more the investor attract to the company.
1.
To identify: The effect of transactions on the accounting equation.
2.
The net income of the company.
Want to see the full answer?
Check out a sample textbook solutionChapter 1 Solutions
FINANCIAL ACCT.FUND.(LOOSELEAF)
- 30: Accounts Payable Factory Building Cash Contributed Capital Equipment Transaction $ 21,000 103,300 29,300 191,000 129,000 During the month of July, the company had the following transactions: a Issued 3,780 shares for $378,000 cash. b. Borrowed $112,000 cash from a local bank, payable in two years. c. Bought a factory building for $204,000; paid $93,000 in cash and signed a three-year note for the balance. d. Paid cash for equipment that cost $222,000 e. Purchased supplies for $33,300 on account. a b C Required: 1. Analyze transactions (a)-(e) to determine their effects on the accounting equation. (Enter any decreases to account balances with a minus sign.) d Land Notes Payable (long-term) Retained Earnings Supplies $ 211,000 4,200 264,500 8,100 Assets Liabilities Shareholders' Equityarrow_forwardAnalyze Deere & Company Deere & Company (DE) manufactures and distributes farm and construction machinery that it sells around the world. In addition to its manufacturing operations, Deere's credit division loans money to customers to finance the purchase of their farm and construction equipment. The following information is available for three recent years (in millions except per-share amounts): Year 3 Year 2 Year 1 Net income (loss) $1,523.9 $1,940.0 $3,161.7 Preferred dividends $ 0.00 $ 763.7 $ 680.0 $ 664.0 $ 0.00 $0.00 Interest expense Shares outstanding for computing earnings per share 315 334 363 Cash dividend per share $ 2.40 $ 2.40 $ 2.22 $ 57,965 $ 59,642 $ 60,429 $ 6,644 $ 7,912 $ 9,667 $ 92.03 $ 81.10 $ 85.58 Average total assets Average stockholders' equity Average stock price per share 1. Calculate the following ratios for each year (Round ratios and percentages to one decimal place, except for per-share amounts. Round per-share amounts to two decimal places.): Year 3…arrow_forward26 Fireside, Incorporated uses accrual basis accounting. Its balance sheets reported Accounts Receivable of $12,000 at the end of its first year and $18,000 at the end of its second year. Its income statement reported Sales Revenue of $120,000 in its second year. What would Fireside's revenues have been if it had used cash basis accounting? Multiple Choice $120,000 $114,000 $126,000 $12,000arrow_forward
- Q1 Let us assume that Mr. Amir starts a business called Amir Enterprises on 1st January, 2021 and invests cash of RO. 20,000 as his capital. Amir Enterprise’s purchases machinery worth RO. 1,000 paid 35% in cash and remaining on credit. The company purchased goods worth RO. 5,000. Paid RO. 2,000 cash and balance on credit The company made a sale of RO. 2800 (cost being RO 3000) on credit basis The company took loan of RO. 10,000 from Bank Muscat . Mr. Amir withdrew RO. 1,000 from the business for his personal use You need to record the above transactions in an equation form. Q2Select any five financial transactions of your choice and make journal entries for the same.arrow_forwardShow the solution in good accounting form On January 01, 2020 Kit Company, Inc. establishes a branch in Bauang. During the year, Kit Inc. transfers cash and merchandise to the branch worth P15,000 and P45,000 respectively. Freight was paid by the home office worth P1,500 included in the cost of merchandise. The home office also incurred P5,700 expenses of which 30 percent was allocated to the branch. On December 31, 2020, the branch incurred a loss of P4,000. What is the balance of the branch account as per home office books?arrow_forwardProblem B Peter Senen Corporation provided the following account balances as of September 30, 2020: Cash P112,000 Accumulated depreciation P 36,000 Accounts Receivable 64,000 Accounts payable 40,000 Finished Goods 48,000 Income tax payable 9,000 Work in process 36,000 Share Capital 500,000 Raw materials 52,000 Retained Earnings 207,000 Property and Equipment 480,000 The following transactions occurred during October: Materials purchased on account, P150,000 Materials issued to production: direct materials- P90,000, Indirect materials- P10,000. Payroll for the month of October 2020 consisted of the following (also paid during the month): Direct labor P62,000…arrow_forward
- Problem 10. Virginia Yacapi, opens a servicing business and capital of P500,000. At the end of the year, the creditor's claims is P175,000 and the owner's is 75% of the total assets. How much is the total assets at the end of the year. Part 3 Financal Worlschest Analucicarrow_forwardStatement of Cash Flows Colorado Corporation was organized at the beginning of the year, with the investment of $250,000 in cash by its stockholders. The company immediately purchased an office building for $300,000, paying $210,000 in cash and signing a three-year promissory note for the balance. Colorado signed a five-year, $60,000 promissory note at a local bank during the year and received cash in the same amount. During its first year, Colorado collected $93,970 from its customers. It paid $65,600 for inventory, $20,400 in salaries and wages, and another $3,100 in taxes. Colorado paid $5,600 in cash dividends. Required Prepare a statement of cash flows for the year. What does this statement tell you that an income statement does not?arrow_forwardJournal Entries Atkins Advertising Agency began business on January 2. The transactions entered into by Atkins during its first month of operations are as follows: Acquired its articles of incorporation from the state and issued 100,000 shares of capital stock in exchange for $200,000 in cash. Purchased an office building for $150,000 in cash. The building is valued at $110,000, and the remainder of the value is assigned to the land. Signed a three-year promissory note at the bank for $125,000. Purchased office equipment at a cost of $50,000, paying $10,000 down and agreeing to pay the remainder in ten days. Paid wages and salaries of $13,000 for the first half of the month. Office employees are paid twice a month. Paid the balance due on the office equipment. Sold $24,000 of advertising during the first month. Customers have until the 15th of the following month to pay their bills. Paid wages and salaries of $15,000 for the second half of the month. Recorded $3,500 in commissions earned by the salespeople during the month. They will be paid on the fifth of the following month. Required Prepare in journal form the entry to record each transaction.arrow_forward
- ORGANIZATION COSTS BB Electric decided to incorporate and has incurred the following costs of organizing: Incorporation fees 400 Attorneys fees 4,800 Promotion expenses 5,700 Prepare the entry for the payment of these organization costs for cash on January 31.arrow_forwardMake a Ledger in this problem Assume that on December 2, 2020. Mr. David Started DB Accounting Firm in Tagbina with the following assets as initial investments: PARTICULARS Cash 15,000 Computers 40,000 Furniture 50,000 Supplies 10,000 December 02 The business was registered with DTI, BIR, and Mayor’s permit spending P300, P500, and P1,200, respectively. 05 Acquired printer amounting to P10,000 for cash 15 Received electricity bill used by the business, P600. 15 Acquired computer chairs and tables on account, P10,000 payable within five days 20 Issued 3 months promissory note amounting to 10,000 to settle the obligation for acquiring computer chairs 21 Mr. David withdrew P1,000 for personal use. 23 Used supplies amounting to 8,000 26 Collected P50,000 for audit service to client 28 Billed P80,000 to the client for tax consultancy performed. 29 Transportation expense incurred and paid, P2,000 30 Provided 10% allowance for depreciation for the use of office equipment and…arrow_forwardQ3 James Collier left his job at a large corporation where he had worked as a senior accountant. He was getting $82000 as yearly salary. He established his own J.C. Accounting firm. J.C. Accounting earned total revenue $680000 in first year. The material cost was $49000; costs for rented equipment were $30000, salary given to the security man was $18800 and wages given to workers were $158229 in a year. The interest forgone for the invested funds was $22000 per year. James Collier estimated his entrepreneurial talent was worth $19850 per year. He was also offered $26985 per year to train employees in another firm. Two students assist him managing his account books for which they are paid $6550 each per year. Find accounting profits and economic profits for J.C. Accounting firm. Should James Collier stay in his business? Why? Explicit costs = Implicit costs = Economic costs = Accounting…arrow_forward
- Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage LearningCollege Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,