Chapter 1, Problem 1.11E

(a)

To determine

Income Statement:

Income statement is one of the financial statements that show the net income earned or net loss suffered by a company by reporting all the revenues earned and expenses incurred by the company over a particular period. This statement is also known as operations statement, earnings statement, revenue statement, or profit and loss statement. The net income is the excess of revenue over expenses.

Retained Earnings Statement:

Retained earnings statement is one of the financial statements that show the amount of net income retained by a company at a particular point of time for reinvestment and used to pay its debts and obligations. It reflects the amount of earnings that is not paid as dividends to the shareholders.

Stockholders’ equity: “Stockholders’ equity refers to the claim of the owners or the stockholders of a company, on its assets. It consists of the contributed capital from the stockholders along with accumulated retained earnings over the years. It is also known as the ‘net worth’ of the company, as it is derived by subtracting the total liabilities from the total assets. In the event of liquidation, stockholders’ equity is paid at the last after meeting the claims of the creditors of the company.”

The missing amount of total stockholders’ equity of P Company at the beginning of the year

(b)

To determine

Additional investment: Additional investment can be determined by calculating the increase in stockholder’s equity and net income or loss of the company.

The additional investment of P Company

(c)

To determine

Liabilities: These are referred to as the financial obligations of a company arising during the course of performing business, which are further settled by the outflow of resources.

The missing amount of total liabilities of H Enterprise at the beginning of the year.

(d)

To determine

Dividends: Dividend is the distribution of a part of the earnings of a company, to the shareholders, as agreed upon by the board of directors,.

The missing amount of dividends of H Enterprises at the end of the year