
Concept explainers
1.
a.
To compute: The amount of equity, of V Company as on December 31, 2016.
1.
a.

Explanation of Solution
Given,
The amount of assets is $54,000.
The amount of liabilities is $25,000.
Formula to calculate equity is,
Substitute$54,000 for assets and $25,000 for liabilities.
Hence, the amount of equity of V Company as on December 31, 2016 is $29,000.
b.
To compute: The amount of equity, of V Company as on December 31, 2017.
b.

Explanation of Solution
Given,
The amount of assets is $59,000.
The amount of liabilities is $36,000.
Formula to calculate equity is,
Substitute$59,000 for assets and $36,000 for liabilities.
Hence, the amount of equity of V Company as on December 31, 2017 is $23,000.
c.
To compute: The amount of net income or loss of V Company as on December 31, 2017.
c.

Explanation of Solution
Given,
The amount of equity is $29,000 of December 31, 2016.
The amount of equity is $23,000 of December 31, 2017.
Stock issuance is $5,000.
Cash dividend is $5,500.
Formula to calculate net income is,
Substitute $29,000 for equity in the beginning, $5,000 for issue of stock, $23,000 for equity at the end, $5,500 for dividend.
Hence, the net loss of V Company as on December 31, 2017 is $5,500.
2.
a.
To compute: The amount of equity, of W Company as on December 31, 2016.
2.
a.

Explanation of Solution
Given,
The amount of assets is $80,000.
The amount of liabilities is $60,000.
Formula to calculate equity is,
Substitute$80,000 for assets and $60,000 for liabilities.
Hence, the amount of equity of W Company as on December 31, 2016 is $20,000.
b.
To compute: The amount of equity, of W Company as on December 31, 2017.
b.

Explanation of Solution
Given,
The amount of assets is $100,000.
The amount of equity is $20,000.
Stock issuance is $20,000.
Net income is $40,000.
Cash dividend is $2,000.
Formula to calculate equity is,
Substitute $20,000 for equity in the beginning,, $20,000 for issue of stock, $40,00 for net income, $2,000 for dividend.
Hence, the amount of equity of W Company as on December 31, 2017 is $78,000.
c.
To compute: The amount of liabilities, of A Company as on December 31, 2017.
c.

Explanation of Solution
Given,
The amount of assets is $100,000.
The amount of equity is $78,000.
Formula to calculate liabilities is,
Substitute$100,000 for assets and $78,000 for equity.
Hence, the amount of liabilities of W Company as on December 31, 2017 is $22,000.
3.
To compute: The amount of stock issuance, of X Company as on December 31, 2017.
3.

Explanation of Solution
Given,
The amount of equity is $73,000 of December 31, 2016.
The amount of equity is $120,700 of December 31, 2017.
Net income is $18,500.
Formula to calculate stock issuance is,
Substitute $73,000 for equity in the beginning, $18,500 for net income, $120,700 for equity at the end.
Working Notes:
Calculation of the amount of equity as on December 31, 2016,
Calculation of the amount of equity as on December 31, 2017,
Hence, the amount of stock issuances of X Company as on December 31, 2017 is $29,200.
4.
To compute: The amount of assets, of Y Company as on December 31, 2017.
4.

Explanation of Solution
Given,
The amount of liabilities is $42,000 as on December 31, 2017.
The amount of equity is $93,100 as on December 31, 2017
Formula to calculate assets is,
Substitute$42,000 for liabilities and $93,100 for equity.
Working notes:
Calculation of the amount of equity as on December 31, 2016,
Calculation of the amount of equity as on December 31, 2017,
Hence, the amount of asset of Y Company as on December 31, 2017 is $135,100.
5.
To compute: The amount of liabilities, of Z Company as on December 31, 2016.
5.

Explanation of Solution
Given,
The amount of assets is $114,000 as on December 31, 2016.
The amount of equity is $44,000 as on December 31, 2016.
Formula to calculate equity is,
Substitute$119,000 for assets and $27,500 for equity.
Working Notes:
Calculation of the amount of equity as on December 31, 2017,
Calculation of the amount of equity as on December 31, 2016,
Hence, the amount of liabilities of Z Company as on December 31, 2016 is $70,000.
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Chapter 1 Solutions
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