Concept explainers
Introduction: Equity refers to the stock which depicts ownership of the investor in the company. It is calculated by reducing the liability value from assets.
To determine: The amount of equity on Dec 31st of year 2017, 2018, and 2019 for Company A
Answer to Problem 2PSA
Equity for company A on Dec 31st 2017 is $30,500, on Dec 31st 2018 is $41,500, and equity for Dec 31st 2019 is $16,500.
Explanation of Solution
a. Equity for company A on Dec 31 of 2017:
Particular | Amount |
Assets | 55000 |
Liabilities | 24500 |
Equity | 30500 |
Thus equity for Dec 31st 2017 is $30,500.
b. Equity for company A on Dec 31 of 2018:
Particular | Amount |
Equity at the end 2017 | 30500 |
Add: Issuance of the tock | 6000 |
Add: Net income | 8500 |
Less: Dividend | (3500) |
Equity on 31 Dec 2018 | 41,500 |
Thus equity for Dec 31st 2018 is $41,500.
c. Equity for company A on Dec 31 of 2019:
Particular | Amount |
Assets | 58,000 |
Liabilities | 41,500 |
Equity | 16,500 |
Thus equity for Dec 31st 2019 is $16,500.
2.
Introduction: Equity refers to the stock which depicts ownership of the investor in the company. It is calculated by reducing the liability value from assets.
To determine: The amount of equity on Dec 31st of year 2017, 2018 and net income for year 2018 for company B.
2.
Answer to Problem 2PSA
Equity for Dec 31st 2017 is $12,500, Dec 31st 2018 is $13,500, the net income of company B on Dec 31st 2018 is $1600
Explanation of Solution
a. Equity for company B on Dec 31 of 2017:
Particular | Amount $ |
Assets | 34,000 |
Liabilities | 21,500 |
Equity | 12,500 |
Thus equity for Dec 31st 2017 is $12,500.
b. Equity for company b on Dec 31 of 2018:
Particular | Amount $ |
Assets | 40,000 |
Liabilities | 26,500 |
Equity | 13,500 |
Thus equity for Dec 31st 2018 is $13,500.
c. Net income of company Bon 31st Dec 2018:
Particular | Amount |
Equity at the end 2017 | 12500 |
Less: Issuance of the stock | 1400 |
Add: Dividend | 2000 |
Add: Equity for the year 2018 | 13500 |
Net income | 1600 |
The net income of company B on Dec 31st 2018 is $1600
3.
Introduction: Equity refers to the stock which depicts ownership of the investor in the company. It is calculated by reducing the liability value from assets.
To compute: The assets of the company C on 31 Dec 2018.
3.
Answer to Problem 2PSA
The assets of company C on Dec 31st is $55,875
Explanation of Solution
Equity for company C on Dec 31 of 2017:
Particular | Amount $ |
Assets | 24,000 |
Liabilities | (9000) |
Equity | 15,000 |
Thus equity for Dec 31st 2018 is $15,000
Equity for company C on Dec 31 of 2018:
Particular | Amount |
Equity at the end 2017 | 15,000 |
Add: Issuance of the tock | 9750 |
Add: Net income | 8000 |
Less: Dividend | 5875 |
Equity on 31 Dec 2018 | 26,875 |
Thus equity for Dec 31st 2018 is $26,875.
The assets for company C on Dec 31st 2018:
Particular | Amount |
Liabilities | 29,000 |
Equity | 26,875 |
Assets | 55,875 |
The assets of company C on Dec 31stis $55,875
Introduction: Equity refers to the stock which depicts ownership of the investor in the company. It is calculated by reducing the liability value from assets.
To compute: The stock issuance for company C on Dec 31st 2018.
Answer to Problem 2PSA
Stock issuance of company D for year 2018 is $27,000
Explanation of Solution
Equity for company D on Dec 31 of 2017:
Particular | Amount $ |
Assets | 60,000 |
Liabilities | (40,000) |
Equity | 20,000 |
Thus equity for Dec 31st 2017 is $20,000.
Equity for company D on Dec 31 of 2018:
Particular | Amount $ |
Assets | 85,000 |
Liabilities | 24,000 |
Equity | 61,000 |
Thus equity for Dec 31st 2018 is $61,000.
Stock issuance of company D for year 2018:
Particular | Amount |
Equity at the end 2017 | 20000 |
Less: Net income | 14000 |
Add: Dividend | 0 |
Add: Equity for the year 2018 | 61000 |
Stock issuance | 27000 |
Stock issuance of company D for year 2018 is $27,000
Introduction: Equity refers to the stock which depicts ownership of the investor in the company. It is calculated by reducing the liability value from assets.
To compute: The amount of liabilities on Company E on Dec 31, 2017
Answer to Problem 2PSA
Assets of company E on Dec 31st 2017 is $91,500
Explanation of Solution
a.Equity for company E on Dec 31 of 2018:
Particular | Amount $ |
Assets | 113000 |
Liabilities | 70000 |
Equity | 43000 |
Thus equity for Dec 31st 2017 is $43000.
Equity for company E on Dec 31 of 2017:
Particular | Amount |
Issuance of stock | 6500 |
Less: Net income | 20,000 |
Add: Dividend | 11,000 |
Equity for the year 2018 | 43,000 |
Equity for the year 2017 | 27,500 |
Thus equity for Dec 31st 2017 is $27,500.
b. Assets of company E on 31st Dec 2017:
Particular | Amount $ |
Assets | 119,000 |
Liabilities | 27,500 |
Equity | 91,500 |
The Assets of company E on Dec 31st 2017 is $91,500.
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Chapter 1 Solutions
Connect Access Card for Financial Accounting: Information and Decisions
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