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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Selected comparative financial statements of Korbin Company follow. Sales KORBIN COMPANY Comparative Income Statements For Years Ended December 31 2021 2020 $ 512,008 $ 392,240 2019 $ 272,200 Cost of goods sold 308,229 245,542 174,208 Gross profit 203,779 146,698 97,992 Selling expenses 72,705 54,129 35,930 Administrative expenses 46,081 34,517 22,593 Total expenses 118,786 88,646 58,523 Income before taxes .84,993 58,052 39,469 Income tax expense 15,809 11,901 8,012 Net income $ 69,184 $ 46,151 $ 31,457 KORBIN COMPANY Comparative Balance Sheets Assets Current assets Long-term investments Plant assets, net Total assets Liabilities and Equity Current liabilities Common stock Other paid-in capital Retained earnings December 31 2021 2020 2019 $ 54,370 0 $ 36,390 600 $ 48,645 3,870 99,436 90,776 53,339 Total liabilities and equity $ 153,806 $ 127,766 $ 105,854 $ 22,456 $ 19,037 $ 18,524 68,000 68,000 50,000 8,500 8,500 5,556 54,850 32,229 31,774 $ 153,806 $ 127,766 $ 105,854

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Answer 2

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 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}$