Owner’s Equity - Owner’s equity is an important component of the balance sheet . Owner’s equity or capital represents the amount invested in the business minus the withdrawals made from the business plus the net income (or minus the net loss) since the business began. To determine: The owner’s equity for Ernest Consulting

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Answer 1

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 1, Problem 16E

To determine

Concept Introduction:

Owner’s Equity - Owner’s equity is an important component of the balance sheet. Owner’s equity or capital represents the amount invested in the business minus the withdrawals made from the business plus the net income (or minus the net loss) since the business began.

To determine: The owner’s equity for Ernest Consulting

Expert Solution & Answer

Explanation of Solution

The owner’s equity can be determined using the two methods as explained below:

Alternative 1:

Given in question:

$C a s h = $ 11, 360$

$A c c o u n t s r e c e i v a b l e = 14, 000$

$O f f i c e \sup p l i e s = 3, 250$

$L a n d = 46, 000$

$O f f i c e e q u i p m e n t = 18, 000$

$A c c o u n t s p a y a b l e = 8, 500$

$O w n e r' s e q u i t y = A s s e t s - L i a b i l i t i e s$

$\begin{array}{l} = C a s h + A c c o u n t s r e c e i v a b l e + O f f i c e \sup p l i e s + L a n d + O f f i c e e q u i p m e n t - A c c o u n t s p a y a b l e \\ = 11, 360 + 14, 000 + 3, 250 + 46, 000 + 18, 000 - 8, 500 \\ = $ 84, 110 \end{array}$

Alternative 2:

$\begin{array}{l} N e t i n c o m e (A s p e r E x e r c i s e 1 - 15) = $ 2, 410 \\ O w n e r' s i n v e s t m e n t = $ 84, 000 \\ O w n e r' s w i t h d r a w a l s = 2, 000 \\ O w n e r' s e q u i t y = O w n e r' s i n v e s t m e n t + N e t i n c o m e - O w n e r' s w i t h d r a w a l s \\ = 84, 000 + 2, 410 - 2, 000 \\ = $ 84, 410 \end{array}$

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During its first month of operation, Peter's Auto Supply Corporation, which specializes the sale of auto equipment and supplies, completed the following transactions. July Transactions July 1 Issued Common Stock in exchange for $100,000 cash. July 1 Paid $4,000 rent for the months of July and August July 2 Paid the insurance company $2,400 for a one year insurance policy, beginning July 1. July 5 Purchased inventory on account for $35,000 (Assume that the perpetual inventory system is used.) July 6 Borrowed $36,500 from a local bank and signed a note. The interest rate is 10%, and principal and interest is due to be repaid in six months. July 8 Sold inventory on account for $17,000. The cost of the inventory is $7,000. July 15 Paid employees $6,000 salaries for the first half of the month. July 18 Sold inventory for $15,000 cash. The cost of the inventory was $6,000. July 20 Paid $15,000 to suppliers for the inventory purchased on January 5. July 26…

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Answer 2

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Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 1, Problem 16E

To determine

Concept Introduction:

Owner’s Equity - Owner’s equity is an important component of the balance sheet. Owner’s equity or capital represents the amount invested in the business minus the withdrawals made from the business plus the net income (or minus the net loss) since the business began.

To determine: The owner’s equity for Ernest Consulting

Expert Solution & Answer

Explanation of Solution

The owner’s equity can be determined using the two methods as explained below:

Alternative 1:

Given in question:

$C a s h = $ 11, 360$

$A c c o u n t s r e c e i v a b l e = 14, 000$

$O f f i c e \sup p l i e s = 3, 250$

$L a n d = 46, 000$

$O f f i c e e q u i p m e n t = 18, 000$

$A c c o u n t s p a y a b l e = 8, 500$

$O w n e r' s e q u i t y = A s s e t s - L i a b i l i t i e s$

$\begin{array}{l} = C a s h + A c c o u n t s r e c e i v a b l e + O f f i c e \sup p l i e s + L a n d + O f f i c e e q u i p m e n t - A c c o u n t s p a y a b l e \\ = 11, 360 + 14, 000 + 3, 250 + 46, 000 + 18, 000 - 8, 500 \\ = $ 84, 110 \end{array}$

Alternative 2:

$\begin{array}{l} N e t i n c o m e (A s p e r E x e r c i s e 1 - 15) = $ 2, 410 \\ O w n e r' s i n v e s t m e n t = $ 84, 000 \\ O w n e r' s w i t h d r a w a l s = 2, 000 \\ O w n e r' s e q u i t y = O w n e r' s i n v e s t m e n t + N e t i n c o m e - O w n e r' s w i t h d r a w a l s \\ = 84, 000 + 2, 410 - 2, 000 \\ = $ 84, 410 \end{array}$

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Answer 3

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 1, Problem 16E

To determine

Concept Introduction:

Owner’s Equity - Owner’s equity is an important component of the balance sheet. Owner’s equity or capital represents the amount invested in the business minus the withdrawals made from the business plus the net income (or minus the net loss) since the business began.

To determine: The owner’s equity for Ernest Consulting

Expert Solution & Answer

Explanation of Solution

The owner’s equity can be determined using the two methods as explained below:

Alternative 1:

Given in question:

$C a s h = $ 11, 360$

$A c c o u n t s r e c e i v a b l e = 14, 000$

$O f f i c e \sup p l i e s = 3, 250$

$L a n d = 46, 000$

$O f f i c e e q u i p m e n t = 18, 000$

$A c c o u n t s p a y a b l e = 8, 500$

$O w n e r' s e q u i t y = A s s e t s - L i a b i l i t i e s$

$\begin{array}{l} = C a s h + A c c o u n t s r e c e i v a b l e + O f f i c e \sup p l i e s + L a n d + O f f i c e e q u i p m e n t - A c c o u n t s p a y a b l e \\ = 11, 360 + 14, 000 + 3, 250 + 46, 000 + 18, 000 - 8, 500 \\ = $ 84, 110 \end{array}$

Alternative 2:

$\begin{array}{l} N e t i n c o m e (A s p e r E x e r c i s e 1 - 15) = $ 2, 410 \\ O w n e r' s i n v e s t m e n t = $ 84, 000 \\ O w n e r' s w i t h d r a w a l s = 2, 000 \\ O w n e r' s e q u i t y = O w n e r' s i n v e s t m e n t + N e t i n c o m e - O w n e r' s w i t h d r a w a l s \\ = 84, 000 + 2, 410 - 2, 000 \\ = $ 84, 410 \end{array}$

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Answer 4

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 1, Problem 16E

To determine

Concept Introduction:

Owner’s Equity - Owner’s equity is an important component of the balance sheet. Owner’s equity or capital represents the amount invested in the business minus the withdrawals made from the business plus the net income (or minus the net loss) since the business began.

To determine: The owner’s equity for Ernest Consulting

Expert Solution & Answer

Explanation of Solution

The owner’s equity can be determined using the two methods as explained below:

Alternative 1:

Given in question:

$C a s h = $ 11, 360$

$A c c o u n t s r e c e i v a b l e = 14, 000$

$O f f i c e \sup p l i e s = 3, 250$

$L a n d = 46, 000$

$O f f i c e e q u i p m e n t = 18, 000$

$A c c o u n t s p a y a b l e = 8, 500$

$O w n e r' s e q u i t y = A s s e t s - L i a b i l i t i e s$

$\begin{array}{l} = C a s h + A c c o u n t s r e c e i v a b l e + O f f i c e \sup p l i e s + L a n d + O f f i c e e q u i p m e n t - A c c o u n t s p a y a b l e \\ = 11, 360 + 14, 000 + 3, 250 + 46, 000 + 18, 000 - 8, 500 \\ = $ 84, 110 \end{array}$

Alternative 2:

$\begin{array}{l} N e t i n c o m e (A s p e r E x e r c i s e 1 - 15) = $ 2, 410 \\ O w n e r' s i n v e s t m e n t = $ 84, 000 \\ O w n e r' s w i t h d r a w a l s = 2, 000 \\ O w n e r' s e q u i t y = O w n e r' s i n v e s t m e n t + N e t i n c o m e - O w n e r' s w i t h d r a w a l s \\ = 84, 000 + 2, 410 - 2, 000 \\ = $ 84, 410 \end{array}$

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Answer 5

Chapter 1, Problem 16E

To determine

Concept Introduction:

Owner’s Equity - Owner’s equity is an important component of the balance sheet. Owner’s equity or capital represents the amount invested in the business minus the withdrawals made from the business plus the net income (or minus the net loss) since the business began.

To determine: The owner’s equity for Ernest Consulting

Expert Solution & Answer

Explanation of Solution

The owner’s equity can be determined using the two methods as explained below:

Alternative 1:

Given in question:

$C a s h = $ 11, 360$

$A c c o u n t s r e c e i v a b l e = 14, 000$

$O f f i c e \sup p l i e s = 3, 250$

$L a n d = 46, 000$

$O f f i c e e q u i p m e n t = 18, 000$

$A c c o u n t s p a y a b l e = 8, 500$

$O w n e r' s e q u i t y = A s s e t s - L i a b i l i t i e s$

$\begin{array}{l} = C a s h + A c c o u n t s r e c e i v a b l e + O f f i c e \sup p l i e s + L a n d + O f f i c e e q u i p m e n t - A c c o u n t s p a y a b l e \\ = 11, 360 + 14, 000 + 3, 250 + 46, 000 + 18, 000 - 8, 500 \\ = $ 84, 110 \end{array}$

Alternative 2:

$\begin{array}{l} N e t i n c o m e (A s p e r E x e r c i s e 1 - 15) = $ 2, 410 \\ O w n e r' s i n v e s t m e n t = $ 84, 000 \\ O w n e r' s w i t h d r a w a l s = 2, 000 \\ O w n e r' s e q u i t y = O w n e r' s i n v e s t m e n t + N e t i n c o m e - O w n e r' s w i t h d r a w a l s \\ = 84, 000 + 2, 410 - 2, 000 \\ = $ 84, 410 \end{array}$

Answer 6

Chapter 1, Problem 16E

To determine

Concept Introduction:

Owner’s Equity - Owner’s equity is an important component of the balance sheet. Owner’s equity or capital represents the amount invested in the business minus the withdrawals made from the business plus the net income (or minus the net loss) since the business began.

To determine: The owner’s equity for Ernest Consulting

Expert Solution & Answer

Explanation of Solution

The owner’s equity can be determined using the two methods as explained below:

Alternative 1:

Given in question:

$C a s h = $ 11, 360$

$A c c o u n t s r e c e i v a b l e = 14, 000$

$O f f i c e \sup p l i e s = 3, 250$

$L a n d = 46, 000$

$O f f i c e e q u i p m e n t = 18, 000$

$A c c o u n t s p a y a b l e = 8, 500$

$O w n e r' s e q u i t y = A s s e t s - L i a b i l i t i e s$

$\begin{array}{l} = C a s h + A c c o u n t s r e c e i v a b l e + O f f i c e \sup p l i e s + L a n d + O f f i c e e q u i p m e n t - A c c o u n t s p a y a b l e \\ = 11, 360 + 14, 000 + 3, 250 + 46, 000 + 18, 000 - 8, 500 \\ = $ 84, 110 \end{array}$

Alternative 2:

$\begin{array}{l} N e t i n c o m e (A s p e r E x e r c i s e 1 - 15) = $ 2, 410 \\ O w n e r' s i n v e s t m e n t = $ 84, 000 \\ O w n e r' s w i t h d r a w a l s = 2, 000 \\ O w n e r' s e q u i t y = O w n e r' s i n v e s t m e n t + N e t i n c o m e - O w n e r' s w i t h d r a w a l s \\ = 84, 000 + 2, 410 - 2, 000 \\ = $ 84, 410 \end{array}$

Answer 7

Chapter 1, Problem 16E

To determine

Concept Introduction:

Owner’s Equity - Owner’s equity is an important component of the balance sheet. Owner’s equity or capital represents the amount invested in the business minus the withdrawals made from the business plus the net income (or minus the net loss) since the business began.

To determine: The owner’s equity for Ernest Consulting

Answer 8

Expert Solution & Answer

Explanation of Solution

The owner’s equity can be determined using the two methods as explained below:

Alternative 1:

Given in question:

$C a s h = $ 11, 360$

$A c c o u n t s r e c e i v a b l e = 14, 000$

$O f f i c e \sup p l i e s = 3, 250$

$L a n d = 46, 000$

$O f f i c e e q u i p m e n t = 18, 000$

$A c c o u n t s p a y a b l e = 8, 500$

$O w n e r' s e q u i t y = A s s e t s - L i a b i l i t i e s$

$\begin{array}{l} = C a s h + A c c o u n t s r e c e i v a b l e + O f f i c e \sup p l i e s + L a n d + O f f i c e e q u i p m e n t - A c c o u n t s p a y a b l e \\ = 11, 360 + 14, 000 + 3, 250 + 46, 000 + 18, 000 - 8, 500 \\ = $ 84, 110 \end{array}$

Alternative 2:

$\begin{array}{l} N e t i n c o m e (A s p e r E x e r c i s e 1 - 15) = $ 2, 410 \\ O w n e r' s i n v e s t m e n t = $ 84, 000 \\ O w n e r' s w i t h d r a w a l s = 2, 000 \\ O w n e r' s e q u i t y = O w n e r' s i n v e s t m e n t + N e t i n c o m e - O w n e r' s w i t h d r a w a l s \\ = 84, 000 + 2, 410 - 2, 000 \\ = $ 84, 410 \end{array}$