Concept explainers
Introduction:
Accounting Equation
Figure (1)
To determine: The missing amounts of Corporation W and G Enterprises.
Answer to Problem 1.16E
Record the missing amounts of Corporation W and G Enterprises.
Title: Missing amounts | ||
Particulars | Corporation W | G Enterprises |
Beginning of year: | ||
Total assets | $110,000 | $150,000 |
Total liabilities | $70,000 | $80,000 (4) |
Total stockholders’ equity | $40,000(1) | $70,000 |
End of year: | ||
Total assets | $180,000(2) | $180,000 |
Total liabilities | $120,000 | $55,000 |
Total stockholders’ equity | $60,000 | $125,000(5) |
Changes during year in | ||
Dividends | $30,000(3) | $5,000 |
Total revenues | $215,000 | $140,000(6) |
Total expenses | $165,000 | $80,000 |
Table (1)
Explanation of Solution
Calculate the amount of stockholders’ equity at the beginning of the year.
Given information: The amount of total assets and total liabilities at the beginning of the year is $110,000 and $70,000 respectively.
Calculation:
Hence, the amount of stockholders’ equity at the beginning of the year of Corporation W is
Calculate the amount of total assets at the end of the year.
Given information: Total liabilities and total stockholders’ at the end of the year is $120,000 and $60,000 respectively.
Hence, the total assets of Corporation W at the end of the year are
Calculate the amount of dividends.
Given information: Total revenue and total expenses is $215,000 and $165,000 respectively.
Step 1: Determine the amount of net income.
Step 2: Determine the amount of change in stockholders’ equity.
Step 3: Determine the amount of dividends.
Hence, the amount of dividends is
Calculate the amount of total liabilities at the beginning of the year.
Given information: Total assets and total stockholders’ equity is $150,000 and $70,000 respectively.
Calculation:
Hence, the amount of total liabilities at the beginning of the year of G Enterprises is
Calculate the amount of total stockholders’ equity at the end of the year.
Given information: Total assets and total liabilities at the end of the year is $180,000 and $55,000 respectively.
Calculation:
Hence, the total stockholders’ equity of G enterprises at the end of the year is
Calculate the amount of revenue.
Step 1: Determine the amount of change in stockholders’ equity.
Step 2: Determine the amount of total revenues.
Hence, total revenue earned by G Enterprises during the year is
Note:
All the changes in amount of stockholders’ equity are caused by changes in retained earnings.
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Chapter 1 Solutions
Financial Accounting: Tools for Business Decision Making, 8th Edition
- The comparative balance sheet of Prime Sports Gear, Inc., at December 31, the end of the fiscal year, is as follows: Additional data obtained from the records of Prime Sports Gear are as follows: a. Net income for 2013 was 121,610. b. Depreciation reported on income statement for 2013 was 46,500. c. Purchased 165,000 of new equipment, putting 90,000 cash down and issuing 75,000 of bonds for the balance. d. Old equipment originally costing 19,500, with accumulated depreciation of 7,950, was sold for 8,000. e. Retired 60,000 of bonds. f. Declared cash dividends of 64,000. g. Issued 1,500 shares of common stock at 27 cash per share. You have been asked to prepare a statement of cash flows for Prime Sports Gear for 2013. Review the worksheet called CASHFLOW that has been provided to assist you in preparing the statement. The worksheet has been designed so that as you make entries in columns D and F, column G will be automatically updated. For example, FORMULA1 should be entered as =B17+D17F17. Columns C and E are to be used to enter letter references for each of the debit and credit entries on the worksheet.arrow_forwardStatement of Retained Earnings Landon Corporation was organized on January 2, 2014, with the investment of $100,000 by each of its two stockholders. Net income for its first year of business was $85,200. Net income increased during 2015 to $125,320 and to $145,480 during 2016. Landon paid $20,000 in dividends to each of the two stockholders in each of the three years. Required Prepare a statement of retained earnings for the year ended December 31, 2016.arrow_forwardThe comparative balance sheet of Prime Sports Gear, Inc., at December 31, the end of the fiscal year, is as follows: Additional data obtained from the records of Prime Sports Gear are as follows: a. Net income for 2013 was 121,610. b. Depreciation reported on income statement for 2013 was 46,500. c. Purchased 165,000 of new equipment, putting 90,000 cash down and issuing 75,000 of bonds for the balance. d. Old equipment originally costing 19,500, with accumulated depreciation of 7,950, was sold for 8,000. e. Retired 60,000 of bonds. f. Declared cash dividends of 64,000. g. Issued 1,500 shares of common stock at 27 cash per share. Open the file CASHFLOW from the website for this book at cengagebrain.com. First, enter the formulas. Then, complete the worksheet in the manner described next. According to the problem, cash increased from 39,600 to 67,210 during the year. This is a 27,610 increase. To record this increase on the worksheet, move to row 17. Since this is the first account you are analyzing, enter the letter a in column C. Then enter 27610 in column D (a debit since cash increased). This brings the year-end balance (column G) to 67,210, its proper balance. Now move to the bottom part of the statement where you see the categories Operating Activities, Investing Activities, and so on. The credit side of the entry has to be entered here. The proper space for this cash entry is on row 59. Enter the letter a in cell E59 and 27610 in cell F59. Notice the totals at the bottom of the page (row 60) now agree. The next account balance that changed is accounts receivable. It increased by 9,035. To enter this change on the worksheet, enter the letter b in cell C18 and 9035 in cell D18 (again, a debit since accounts receivable increased). This brings the year-end balance in column G to 121,250, its proper balance. The change in accounts receivable balance is an operating activity adjustment (as explained in your textbook). Enter the credit side of this entry in cells E34 and F34, and enter the explanation Increase in accounts receivable in cell A34. Note: Your textbook probably shows Net income as the first item under Operating Activities. We will get to that later. The sequence in which you enter items on this worksheet is not important. All other balance sheet accounts must be analyzed in the same manner, placing appropriate debit or credit entries in the top part of the worksheet to obtain the proper balances in column G, and then entering the second side of the entry in the appropriate row on the bottom part of the worksheet. You should use letter references to identify all entries. Also, you must enter a description of the entry in column A under the appropriate activity category. Although a sequence of analyzing the balance sheet from top to bottom is suggested here, this order is not necessary. As mentioned earlier, your textbook may specify a different sequence. Also, note that some accounts may have both debit and credit adjustments to them. The worksheet is not a substitute for a statement of cash flows, but it does provide you with all the numbers you need to properly prepare one. You will be done with your analysis when: a. The individual account balances at December 31, 2013, as shown on the worksheet (column G) equal those shown in the given problem data. b. The transaction column totals are equal (cells D60 and F60). c. The sum of the operating, investing, and financing activities (cell G59) equals the change in cash (cell D59 or F59). When you are finished, enter your name in cell A1. Save your completed file as CASHFLOW2. Print the worksheet when done. Also print your formulas. Check figure: Total credits at 12/31/2013 (cell G31), 860,460.arrow_forward
- Income Statement Ratio The income statement of Holly Enterprises shows operating revenues of $134,800, selling expenses of $38,310, general and administrative expenses of $36,990, interest expense of $580, and income tax expense of $13,920. Hollys stockholders equity was $280,000 at the beginning of the year and $320,000 at the end of the year. The company has 20,000 shares of stock outstanding at the end of the year. Required Compute Hollys profit margin. What other information would you need in order to comment on whether this ratio is favorable?arrow_forwardRebert Inc. showed the following balances for last year: Reberts net income for last year was 3,182,000. Refer to the information for Rebert Inc. above. Required: 1. Calculate the average common stockholders equity. 2. Calculate the return on stockholders equity.arrow_forwardFarmington Corporation began the year with a retained earnings balance of $20,000. The company paid a total of $3,000 in dividends and earned a net income of $60,000 this year. What is the ending retained earnings balance?arrow_forward
- Using the following Company W information, prepare a Retained Earnings Statement. Retained earnings balance January 1, 2019, $43,500 Net income for year 2019, $55,289 Dividends declared and paid for year 2019, $18,000arrow_forwardMontana Incorporated began the year with a retained earnings balance of $50,000. The company paid a total of $5,000 in dividends and experienced a net loss of $25,000 this year. What is the ending retained earnings balance?arrow_forwardNet income and dividends The income statement of a corporation for the month of November indicates a net income of $90,000. During the same period, $100,000 in cash dividends were paid. Would it be correct to say that the business incurred a net loss of $10,000 during the month? Discuss.arrow_forward
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