Chapter 1, Problem 1.16E

Below are approximate amounts related to balance sheet information reported by five companies in previous years.

  1.    ExxonMobil reports total assets of $228 billion and total liabilities of $107 billion. What is the amount of stockholders’ equity?

  2.    Citigroup reports total liabilities of $1,500 billion and stockholders’ equity of $110 billion. What is the amount of total assets?

  3.    Amazon.com reports total assets of $4.7 billion and total stockholders’ equity of $0.3 billion. What is the amount of total liabilities?

  4.    Nike reports an increase in assets of $1.2 billion and an increase in liabilities of $0.3 billion. What is the amount of the change in stockholders’ equity?

  5.    Kellogg reports a decrease in liabilities of $0.34 billion and an increase in stockholders’ equity of S0.02 billion. What is the amount of the change in total assets?

  Required:

  Calculate the answer to each.

To determine

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.

To determine: The amount of stockholders’ equity of Company CC.

Answer to Problem 1.16E

The amount of stockholders’ equity of Company EM is $121 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:

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

Determine the amount of stockholders’ equity.

Given:

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

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

Conclusion

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

To determine

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

To determine: The amount of total assets of Company C.

Answer to Problem 1.16E

The total assets of Company C is $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:

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

Determine the amount of total assets.

Given:

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

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

Conclusion

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

To determine

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

To determine: The amount of total liabilities of Company A.

Answer to Problem 1.16E

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:

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

Determine the amount of dividend paid during the year.

Given:

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

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

Conclusion

Hence, total liabilities of Company A is $4.4 billion

To determine

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.

To determine: The amount of change in stockholders equity of Company N.

Answer to Problem 1.16E

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

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

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.

To determine

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

To determine: The amount of change in total assets of Company K.

Answer to Problem 1.16E

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

Explanation of Solution

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 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.