FUNDAMENTAL ACCOUNTING PRINCIPLES
FUNDAMENTAL ACCOUNTING PRINCIPLES
24th Edition
ISBN: 9781264044375
Author: Wild
Publisher: McGraw-Hil
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Chapter 1, Problem 2BPSB
To determine

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:

  Assets = Liabilities + Equity

Requirement 1a.

The amount of Equity on December 31, 2018 for Company V

Expert Solution
Check Mark

Answer to Problem 2BPSB

The amount of Equity on December 31, 2018 for Company V is $29,000

Explanation of Solution

The amount of Equity can be calculated by subtracting Assets and liabilities =54000-25000 = $29,000.

To determine

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:

FUNDAMENTAL ACCOUNTING PRINCIPLES, Chapter 1, Problem 2BPSB , additional homework tip  1

Requirement 1b.

The amount of Equity on December 31, 2019 for Company V

Expert Solution
Check Mark

Answer to Problem 2BPSB

The amount of Equity on December 31, 2019 for Company V is $23,000

Explanation of Solution

The amount of Equity can be calculated by subtracting Assets and liabilities =59000-36000 = $23,000.

To determine

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:

FUNDAMENTAL ACCOUNTING PRINCIPLES, Chapter 1, Problem 2BPSB , additional homework tip  2

Requirement 1c.

The amount of Net income or loss for the year 2019 for Company V

Expert Solution
Check Mark

Answer to Problem 2BPSB

The amount of Net loss for the year 2019 for Company V is $5,500

Explanation of Solution

The amount of Net income for the year 2019 for Company V is as follows:

Ending Equity = Beginning Equity + Owner's investment + Net income −Owner's withdrawals

23,000 = 29000+5000+Net Income -5500
23000 =Net Income +28500
Hence Net income = -5500 or Net Loss =$5500

To determine

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:

FUNDAMENTAL ACCOUNTING PRINCIPLES, Chapter 1, Problem 2BPSB , additional homework tip  3

Requirement 2a.

The amount of Equity on December 31, 2018 for Company W

Expert Solution
Check Mark

Answer to Problem 2BPSB

The amount of Equity on December 31, 2018 for Company W is $20,000

Explanation of Solution

The amount of Equity can be calculated by subtracting Assets and liabilities =80,000-60,000 = 20,000

To determine

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:

FUNDAMENTAL ACCOUNTING PRINCIPLES, Chapter 1, Problem 2BPSB , additional homework tip  4

Requirement 2b.

The amount of Equity on December 31, 2019 for Company W

Expert Solution
Check Mark

Answer to Problem 2BPSB

The amount of Equity on December 31, 2019 for Company W is $78,000

Explanation of Solution

The amount of Equity on December 31, 2019 for Company W is calculated as follows:

Ending Equity = Beginning Equity + Owner's investment + Net income −Owner's withdrawals

=20000+20000+40000-2000

= $78,000

To determine

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:

FUNDAMENTAL ACCOUNTING PRINCIPLES, Chapter 1, Problem 2BPSB , additional homework tip  5

Requirement 2c.

The amount of Liabilities on December 31, 2019 for Company W

Expert Solution
Check Mark

Answer to Problem 2BPSB

The amount of Liabilities on December 31, 2019 for Company W is $22,000

Explanation of Solution

The amount of Liabilities on December 31, 2019 for Company W is calculated as follows:

Liabilities = Assets − Equity = 100000-78,000 = $22,000

To determine

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:

FUNDAMENTAL ACCOUNTING PRINCIPLES, Chapter 1, Problem 2BPSB , additional homework tip  6

Requirement 3.

The amount of Owner's Investment for Company X during the year 2019

Expert Solution
Check Mark

Answer to Problem 2BPSB

The amount of Owner's Investment for Company X during the year 2019 is $29,200

Explanation of Solution

The amount of Owner's Investment for Company X during the year 2019 is calculated as follows:

Equity as on Dec. 31, 2018 =Assets − Liabilities = 141500-68500 =$73,000

Equity as on Dec. 31, 2019 =Assets − Liabilities = 186500-65800 = $120,700

Ending Equity = Beginning Equity + Owner's investment + Net income −Owner's withdrawals

120700 = 73000 + Owner's investment +18500-0
120700 = 91500+ Owner's investment
Owner's investment = 120700-91500 =$29,200

To determine

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:

FUNDAMENTAL ACCOUNTING PRINCIPLES, Chapter 1, Problem 2BPSB , additional homework tip  7

Requirement 4.

The amount of Assets for Company Y as on Dec. 31, 2019

Expert Solution
Check Mark

Answer to Problem 2BPSB

The amount of Assets for Company Y as on Dec. 31, 2019 is $135,100

Explanation of Solution

The amount of Assets for Company Y as on Dec. 31, 2019 is calculated as follows:

Equity as on Dec. 31, 2018 =Assets − Liabilities = 92500-51500 =$41,000

Equity as on Dec. 31, 2019 = Beginning Equity + Owner's investment + Net income −Owner's withdrawals =41000+48100+24000-20000 =$93,100

Assets as on Dec. 31, 2019 = Equity + Liabilities = 93100+42000 =$135,100

To determine

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:

FUNDAMENTAL ACCOUNTING PRINCIPLES, Chapter 1, Problem 2BPSB , additional homework tip  8

Requirement 5.

The amount of Liabilities for Company Z as on Dec. 31, 2018

Expert Solution
Check Mark

Answer to Problem 2BPSB

The amount of Liabilities for Company Z as on Dec. 31, 2018 is $100,000

Explanation of Solution

The amount of Liabilities for Company Z as on Dec. 31, 2018 is calculated as follows:

Equity as on Dec. 31, 2019 =Assets − Liabilities = 170,000-42000 =$128,000

Ending Equity = Beginning Equity + Owner's investment + Net income −Owner's withdrawals
128000 = Beginning Equity+60000+32000-8000

128000 = Beginning Equity+ 84,000
Beginning Equity = 128000-84000 = $44,000

Liabilities as on Dec. 31, 2018 = Assets- Equity =144000-44000 =$100,000

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Chapter 1 Solutions

FUNDAMENTAL ACCOUNTING PRINCIPLES

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