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Concept Introduction:
Accounting equation represents the mathematical relationship between assets, liabilities and equity. According to this equation, assets are equal to the sum of liabilities and equity. The formal for basic accounting equation is as follows:
Requirement 1a.
The amount of Equity on December 31, 2018 for Company A
Answer to Problem 2APSA
The amount of Equity on December 31, 2018 for Company A is $30,500
Explanation of Solution
The amount of Equity can be calculated by subtracting Assets and liabilities =55,000-24500 = $30,500.
Concept Introduction:
Accounting equation represents the mathematical relationship between assets, liabilities and equity. According to this equation, assets are equal to the sum of liabilities and equity. The formal for basic accounting equation is as follows:
Requirement 1b.
The amount of Equity on December 31, 2019 for Company A
Answer to Problem 2APSA
The amount of Equity on December 31, 2019 for Company A is $41,500
Explanation of Solution
The amount of Equity can be calculated using the formula as follows:
Equity = Equity beginning balance + Owner's investment + Net income −Owner's withdrawals =30500 +6000+8500-3500 = $41,500.
Concept Introduction:
Accounting Equation:
Accounting equation represents the mathematical relationship between assets, liabilities and equity. According to this equation, assets are equal to the sum of liabilities and equity. The formal for basic accounting equation is as follows:
Requirement 1c.
The amount of Liabilities on December 31, 2019 for Company A
Answer to Problem 2APSA
The amount of Liabilities on December 31, 2019 for Company A is $16,500
Explanation of Solution
The amount of Liabilities can be calculated using the formula as follows:
Liabilities = Assets − Equity = 58000-41500 =$16,500
Concept Introduction:
Accounting Equation:
Accounting equation represents the mathematical relationship between assets, liabilities and equity. According to this equation, assets are equal to the sum of liabilities and equity. The formal for basic accounting equation is as follows:
Requirement 2a.
The amount of Equity on December 31, 2018 for Company B
Answer to Problem 2APSA
The amount of Equity on December 31, 2018 for Company B is $12,500
Explanation of Solution
The amount of Equity can be calculated by subtracting Assets and liabilities =34500-21500 = $12,500.
Concept Introduction:
Accounting Equation:
Accounting equation represents the mathematical relationship between assets, liabilities and equity. According to this equation, assets are equal to the sum of liabilities and equity. The formal for basic accounting equation is as follows:
Requirement 2b.
The amount of Equity on December 31, 2019 for Company B
Answer to Problem 2APSA
The amount of Equity on December 31, 2019 for Company B is $13,500
Explanation of Solution
The amount of Equity can be calculated by subtracting Assets and liabilities =40000-26500 = $13,500.
Concept Introduction:
Accounting Equation:
Accounting equation represents the mathematical relationship between assets, liabilities and equity. According to this equation, assets are equal to the sum of liabilities and equity. The formal for basic accounting equation is as follows:
Requirement 2c.
The Net Income for the year 2019 for Company B
Answer to Problem 2APSA
The Net Income for the year 2019 for Company B is $1,600
Explanation of Solution
The Net Income for the year 2019 for Company B is calculated as follows:
Ending Equity balance = Equity beginning balance + Owner's investment + Net income −Owner's withdrawals
13500 = 12500+1400+ Net Income -2000
13500 =Net Income +11900
Net Income = 13500-11900 = $1,600
Concept Introduction:
Accounting Equation:
Accounting equation represents the mathematical relationship between assets, liabilities and equity. According to this equation, assets are equal to the sum of liabilities and equity. The formal for basic accounting equation is as follows:
Requirement 3.
The amount of assets for Company C as on December 31, 2019
Answer to Problem 2APSA
The amount of assets for Company C as on December 31, 2019 is $55,875
Explanation of Solution
The amount of assets for Company C as on December 31, 2019 is calculated as follows:
Equity as on Dec. 31, 2018 = Assets − Liabilities = 24000-9000 = $15,000
Equity as on Dec. 31, 2019 = Equity beginning balance + Owner's investment + Net income −Owner's withdrawals= 15000+9750+8000-5875 = $26,875
Assets as on Dec. 31, 2019 = Liabilities + Equity = 29000+26875 = $55,875
Concept Introduction:
Accounting Equation:
Accounting equation represents the mathematical relationship between assets, liabilities and equity. According to this equation, assets are equal to the sum of liabilities and equity. The formal for basic accounting equation is as follows:
Requirement 4.
The amount of owner's investment for Company D during the year 2019
Answer to Problem 2APSA
The amount of owner's investment for Company D during the year 2019 is $27,000
Explanation of Solution
The amount of owner's investment for Company D during the year 2019 is calculated as follows:
Equity as on Dec. 31, 2018 = Assets − Liabilities = 60000-40000 = $20,000
Equity as on Dec. 31, 2019 = Assets − Liabilities = 85000-24000 = $61,000
Now,
Ending Equity = Equity beginning balance + Owner's investment + Net income −Owner's withdrawals
61000 =20000+ Owner's investment+14000-0
61000 =34000+ Owner's investment
Hence,
Owner's investment = 61000-34000 = $27,000
Concept Introduction:
Accounting Equation:
Accounting equation represents the mathematical relationship between assets, liabilities and equity. According to this equation, assets are equal to the sum of liabilities and equity. The formal for basic accounting equation is as follows:
Requirement 5.
The amount of Liabilities for Company E as on December 31, 2019
Answer to Problem 2APSA
The amount of Liabilities for Company E as on December 31, 2019 is $91,500
Explanation of Solution
The amount of Liabilities for Company E as on December 31, 2019 is calculated as follows:
Equity as on Dec. 31, 2019 = Assets − Liabilities = 113000-70000 = $43,000
Now,
Ending Equity = Equity beginning balance + Owner's investment + Net income −Owner's withdrawals
43000= Equity beginning balance+6500+20000-11000
43000 = Equity beginning balance+15500
Equity beginning balance = 43000-15500 = $27,500
Now,
Liabilities for Company E as on December 31, 2019 = Assets − Equity = 119000-27500 = $91,500
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Chapter 1 Solutions
Loose Leaf For Fundamental Accounting Principles Format: Loose-leaf
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