Chapter 1, Problem 16E

1.

To determine

Determine the amount of stockholders’ equity of Company EM.

Answer to Problem 16E

The amount of stockholders’ equity of Company EM is $121 billion.

Explanation of Solution

Stockholders’ Equity: Stockholders Equity refers to the right the owner possesses over the resources of the business. Common stock and the retained earnings are the components of the Stockholders Equity.

Balance Sheet:

Balance Sheet summarizes the assets, the liabilities, and the Shareholder’s equity of a company at a given date. It is also known as the statement of financial status of the business. The financial position can be summarized by the accounting equation:

$\text{Assets}=\text{Liabilities}+\text{Stockholder's Equity}$

Given:

Total assets is $228 billion and total liabilities is $107 billion.

Determine the amount of stockholders’ equity.

$\begin{array}{c}\text{Stockholder's Equity}=\text{Assets}-\text{Liabilities}\\ \text{Stockholder's Equity}=\$228\text{ billions}-\$107\text{ billions}\\ \text{Stockholder's Equity}=\$121\text{ billions}\end{array}$

Conclusion

Hence, stockholders’ equity of Company EM is $121 billion.

2.

To determine

Determine the amount of total assets of Company C.

Answer to Problem 16E

The total assets of Company C are $1,610 billion.

Explanation of Solution

Balance Sheet:

Balance Sheet summarizes the assets, the liabilities, and the Shareholder’s equity of a company at a given date. It is also known as the statement of financial status of the business. The financial position can be summarized by the accounting equation:

$\text{Assets}=\text{Liabilities}+\text{Stockholder's Equity}$

Asset: Assets refer to the resources owned by the business, which are utilized in the course of the business to generate revenue.

Given:

Total liabilities is $1,500 billion and stockholders’ equity is $110 billion.

Determine the amount of total assets.

$\begin{array}{l}\text{Assets}=\text{Liabilities}+\text{Stockholder's Equity}\\ \text{Assets}=\$1,500\text{ billion}+\$110\text{ billion}\\ \text{Assets}=\$,1610\text{ billion}\end{array}$

Conclusion

Hence, the total assets of Company C $1,610 billion.

3.

To determine

Determine the amount of total liabilities of Company A.

Answer to Problem 16E

The total liabilities of Company A is $4.4 billion.

Explanation of Solution

Balance Sheet:

Balance Sheet summarizes the assets, the liabilities, and the Shareholder’s equity of a company at a given date. It is also known as the statement of financial status of the business. The financial position can be summarized by the accounting equation:

$\text{Assets}=\text{Liabilities}+\text{Stockholder's Equity}$

Liability: Liabilities include the claims of the creditors on the assets of the business. The liability is the obligation of the business.

Given:

Total assets is $4.7 billion and stockholders’ equity is $0.3 billion.

Determine the amount of dividend paid during the year.

$\begin{array}{c}\text{Liabilities}=\text{Assets}-\text{Stockholder's Equity}\\ \text{Liabilities}=\$4.7\text{ billion}-\$0.3\text{ billion}\\ \text{Liabilities}=\$4.4\text{ billion}\end{array}$

Conclusion

Hence, total liabilities of Company A is $4.4 billion

4.

To determine

Determine the amount of change in stockholders equity of Company N.

Answer to Problem 16E

The amount of change in stockholders equity of Company N is $0.9 billion.

Explanation of Solution

Stockholders’ Equity: Stockholders Equity refers to the right the owner possesses over the resources of the business. Common stock and the retained earnings are the components of the Stockholders Equity.

Balance Sheet:

Balance Sheet summarizes the assets, the liabilities, and the Shareholder’s equity of a company at a given date. It is also known as the statement of financial status of the business. The financial position can be summarized by the accounting equation:

$\text{Assets}=\text{Liabilities}+\text{Stockholder's Equity}$

Given:

Increase in assets is $1.2 billion and increase in liabilities is $0.3 billion.

Determine the amount of change in stockholders equity.

$\begin{array}{c}\text{Change in Stockholder's Equity}=\left\{\begin{array}{l}\text{Change in }\\ \text{Assets}\end{array}\right\}-\left\{\begin{array}{l}\text{Change in }\\ \text{Liabilities}\end{array}\right\}\\ \text{Change in Stockholder's Equity}=\$1.2\text{ billion}-\$0.3\text{ billion}\\ \text{Change in Stockholder's Equity}=\$0.9\text{ billion}\end{array}$

Conclusion

Hence, the change in stockholders equity of Company N is $0.9 billion.

5.

To determine

Determine the amount of change in total assets of Company K.

Answer to Problem 16E

The change in total assets of Company K is decreased by $0.32 billion.

Explanation of Solution

Asset: Assets refer to the resources owned by the business, which are utilized in the course of the business to generate revenue.

Balance Sheet summarizes the assets, the liabilities, and the Shareholder’s equity of a company at a given date. It is also known as the statement of financial status of the business. The financial position can be summarized by the accounting equation:

$\text{Assets}=\text{Liabilities}+\text{Stockholder's Equity}$

Given:

Decrease in liabilities is $0.34 billion and increase in stockholders’ equity is $0.02 billion.

Determine the amount of change in total assets.

$\begin{array}{l}\text{Change in Assets}=\left\{\begin{array}{l}\text{Change in }\\ \text{Liabilities}\end{array}\right\}+\left\{\begin{array}{l}\text{Change in }\\ \text{Stockholder's Equity}\end{array}\right\}\\ \text{Change in Assets}=\left(\$0.34\text{ billion}\right)+\$0.02\text{ billion}\\ \text{Change in Assets}=\$0.32\text{ billion (Decrease in assets)}\end{array}$

Conclusion

Hence, the total assets of Company K is decreased by $0.32 billion.