Concept explainers
Financial statements
Padget Home Services began its operations on January 1, 20Y7 (see Problem 2-3). After its second year of operations, the following amounts were taken from the accounting records of Padget Home Services, Inc., as of December 31, 20Y8.
Instuctions
Prepare a balance sheet as of December 31, 20Y8.
Balance sheet- It is a financial statement that records the company's assets, liabilities and stockholder's equity at a point in time. The balance sheet also known as statement of financial condition is expressed in the accounting equation as:
The balance sheet is prepared using accounting equation in vertical form. Also, the balance on assets side must be equal to sum of balances of liabilities and stockholder's equity.
To prepare the balance sheet of company P for the year ended December 31, 20Y8.
Answer to Problem 2.4.3P
The balance sheet of Company P reports total assets of $500000 is equal to the sum of total liabilities of $120000 and stockholder's equity of $380000.
Explanation of Solution
Computation of balance sheet of company P for the year ended December 31, 20Y8:
Computation of purchase of land during year ended December 31, 20Y8:
Computation of issue of notes payable during year ended December 31, 20Y8:
Computation of retained earnings balance for the year ended December 31, 20Y8:
Computation of issue of common stock during year ended December 31, 20Y8:
Computation of Cash balance of company P for the year ended December 31, 20Y8:
Computation of Net Income
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