Assignment
BE1.4: Use the expanded accounting equation to answer each of the following equation.
a) The liabilities of Platt company are $90,000, Owner's capital is $150,000; Drawings are $40,000;
Revenue $450,000; and expense is $340,000. What is the amount of Platt company's total asset.
b) The total asset of Sierra company are $57,000; Owner's capital is $35,000; Drawings are $7,000
Revenues are $52,00 and Expense is $35,000. What is the amount of Sierra company's liability.
c) If total assets decreased $80,000 and owner's equity increased $120,000 during the year, what is
the total liabilities at the end of the year?`
Answers:
a) Calculate Platt Company's Total Assets:
Asset = Liability + Owner's capital – Drawing + Revenue – Expenses.
Liabilities = $90,000
Owner's Capital = 150,000
Drawings = 40,000
Revenue = 450,000
Expenses = 340,000
Asset = $90,000 + $150,000 - $40,000 + $450,000 - $340,000
Platt Company's total assets are $310,000.
b) Calculate Sierra Company's Liabilities:
Liabilities=Assets− (Owner’s Capital – Drawings + Revenue − Expenses)
Total asset $57,000
Owner's equity $35,000
Drawings $7,000
Revenue $52,000
Expenses $35,000
Liability= $57,000 – ($35,000 - $7,000 + $52,000 - $35,000)
= 57,000 − 45,000 = 12,000
Sierra Company's liabilities are $12,000.
c) Calculate Total Liabilities at the End of the Year
If total assets decreased $80,000 and owner's equity increased $120,000 during the year, what is the
total liabilities at the end of the year?
Liabilities = Assets − Owner’s Equity
Total asset - $80,000(decreased)
owner's capital $120,000
Total Liabilities = −$200,000(decreased)
Liabilities decreased by $200,000 during the year.
E1.6: Selected transactions for Poway Landscaping company are listed below.
1. Made cash investment to start business
2. Paid monthly rent
3. Purchased equipment on account
4. Billed customers for services performed
5. Withdrew cash for owner's personal use
6. Received cash from customer billed in (4)
7. Incurred advertising expenses on account
8. Purchased additional equipment for cash
9. Received cash from customers when service was performed
Instructions
list the numbers of the above transactions and describe the effect of each transaction on asset,
liabilities and owner's equity.
Answers
1. Increase in asset and increase in owner's equity
2. Decrease in asset and decrease owner's equity
3. Increase in asset and increased in liability
4. Increase in asset and increased in owner's equity
5. Decrease in asset and decrease in owner's equity
6. Increase asset and decrease asset
7. Decrease owner's equity and increase liability
8. Decrease in asset and increase in asset
9. Increase in asset and increase in owner's equity
E1.14: financial statement Saira marrow is the sole owner of Buena vista park camping ground
Saira has compiled the following financial information as of December 31,2020:
Revenue during 2020 camping fees $140,000 fair value of equipment $140,000
Revenue during 2020 general store 65,000 Notes payable 60,000
account payable 11,000 Expenses during 2020 160,000
cash on hand 23,000 account receivable 17,500
original cost of equipment 115,500
instruction:
a) Determine Saira net incomes from Buena vista park for 2020
b) Prepare a balance sheet for Buena vista park of December 31,2020
Solutions
a) Determine Saira net incomes from Buena vista park for 2020
Revenue
Revenue camping fees $140,000
Revenue du general store 65,000
Total revenues $205,000
Expenses
Expenses during 2020 $160,000
Net income $45,000
b) Prepare a balance sheet for Buena vista park of December 31,2020
Assets
Cash on Hand: $23,000
Accounts Receivable: 17,500
Equipment (Fair Value): 140,000
Total asset $180,500
Liabilities
Payable: $11,000
Notes Payable: 60,000
Total liability $71,000
Owner’s Equity
owner's equity = asset – liability
owner's equity= 180,500 – 71,000 = $109,500
Buena vista park
Balance sheet
At December 31,2020
Assets
Cash on Hand: $23,000
Accounts Receivable: 17,500
Equipment (Fair Value): 140,000
Total asset $180,500
Liability and Owner's equity
Liabilities
Payable: $11,000
Notes Payable: 60,000
Total liability $71,000
Owner's Equity
Owner's capital $109,500
Total Liabilities and Equity $180,500
P1.1A: On April 1, Julie Spengel established Spengel's Travel agency. The following transactions were
completed during the month.
1. Invested $15,000 cash to start the agency
2. Paid $600 Cash for April office rent
3. Purchased equipment for $3,000 cash
4. Incurred $700 of advertising cost in the Chicago Tribune, on account
5. Paid $900 cash for office supplies
6. Performed service worth $10,000: $3,000 cash is received from customer and the balance
$7,000 is billed to customer on account
7. Withdraw $600 cash for personal use
8. Paid Chicago Tribune $500 of the amount due in transaction (4)
9. Paid employees' salaries $2,500
10. Received $4,000 from customers who have previously billed in transaction (6)
Instructions:
a) Prepare a tubular analysis of transactions using column heading: Cash, Accounts Receivable
Supplies, Equipment, Accounts payable, Owner's capital, Owner's drawings, Revenues and
Expenses.
b) From analysis of owner's equity columns, compute the net income or net loss for April
Solutions
a) prepare a tubular analysis of trabsactions
Asset = Liability + Owner's equity -
Cash + Account + supplies + Equipment = Account + Owner's - Owner's + Revenues - Expenses
Receivable payable capital drawings
1) +$15,000 $15,000
2) -$600 -$600
3) -$3,000 +$3,000
4) + $700 - $700
5) -$900 +$900
6) +$3,000 +$7,000 +$10,000
7) -$600 -$600
8) -$500 -$500
9) -$2,500 -$2,500
10) +$4,000 -$4,000
b) From analysis of owner's equity compute net income or loss income
Revenues
Service revenue $10,000
Expenses
Total expenses $15,500
Net loss $5,500
