(a)
It is a vital element in recording the effects of financial activities in a business. 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 of company A as of December 31, 20Y7
Answer to Problem 2.5E
The stockholders' equity of Company A as of December 31, 20Y7 is $825000.
Explanation of Solution
Computation of stockholders' equity as of December 31, 20Y7:
In
(b)
Accounting Equation:
It is a vital element in recording the effects of financial activities in a business. 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.
Stockholders' equity of company A as of December 31, 20Y8, when assets increased by $150000 and liabilities increased by $80000 during 20Y8.
Answer to Problem 2.5E
The stockholders' equity of Company A as of December 31, 20Y8 is $895000.
Explanation of Solution
Computation of Assets as of December 31, 20Y8:
Computation of liabilities of Company A as of December 31, 20Y8:
Computation of stockholders' equity of company a as of December 31, 20Y8:
In accounting equation,
(c)
Accounting Equation:
It is a vital element in recording the effects of financial activities in a business. 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.
Stockholders' equity of company A as of December 31, 20Y8, when assets decreased by $200000 and liabilities increased by $100000 during 20Y8.
Answer to Problem 2.5E
The stockholders' equity of Company A as of December 31, 20Y8 is $525000.
Explanation of Solution
Computation of Assets as of December 31, 20Y8:
Computation of liabilities of Company A as of December 31, 20Y8:
Computation of stockholders' equity of company a as of December 31, 20Y8:
In accounting equation,
(d)
Accounting Equation:
It is a vital element in recording the effects of financial activities in a business. 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.
Stockholders' equity of company A as of December 31, 20Y8, when assets increased by $400000 and liabilities decreased by $75000 during 20Y8.
Answer to Problem 2.5E
The stockholders' equity of Company A as of December 31, 20Y8 is $1300000.
Explanation of Solution
Computation of Assets as of December 31, 20Y8:
Computation of liabilities of Company A as of December 31, 20Y8:
Computation of stockholders' equity of company a as of December 31, 20Y8:
In accounting equation,
(e)
Accounting Equation:
It is a vital element in recording the effects of financial activities in a business. 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.
Net income (or net loss) during 20Y8, when assets and liabilities were $1275000 and $290000, respectively (there were no dividends and no additional common stock issued).
Answer to Problem 2.5E
The net income of company A as of December 31, 20Y8 is $160000/
Explanation of Solution
Computation of stockholders' equity as of December 31, 20Y7:
In accounting equation,
Assuming
Computation of Stockholders' equity as of December 31, 20Y8:
In accounting equation,
Assuming no additional common stock during year 20Y8,
Common stock during Year 20Y8 = $825000
Computation of Net income as of year ending December 31, 20Y8:
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Chapter 2 Solutions
Survey of Accounting (Accounting I)
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- Multiple-step income statement and balance sheet The following selected accounts and their current balances appear in the ledger of Clairemont Co. for the fiscal year ended May 31, 20Y2: Instructions 1. Prepare a multiple-step income statement. 2. Prepare a statement of stockholders equity. Additional common stock of 75,000 was issued during the year ended May 31, 20Y2. 3. Prepare a balance sheet, assuming that the current portion of the note payable is 50,000. 4. Briefly explain how multiple and single-step income statements differ.arrow_forwardFinancial statements We-Sell Realty was organized as a corporation on August 1, 20Y7, by the issuance of common stock of 15,000. We-Sell Realty is owned and operated by Omar Farah, the sole stockholder. The following statements for We-Sell Realty were prepared after its first month of operations: a. Identify the errors contained within the presented financial statements for We-Sell Realty. b. Prepare a corrected set of financial statements for We-Sell Realty.arrow_forwardAssume that as of January 1, 20Y8, Sylvester Con- suiting has total assets of $500,000 and total assets of $150,000. As of December 31, 20Y8, Sylvester has total liabilities of $200,000 and total stockholders’ equity of $400,000. (a) What was Sylvester’s stockholders’ equity as of January 1, 20Y8? (b) Assume that Sylvester did not pay any dividends during 20Y8. What was the amount of net income for 20Y8?arrow_forward
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