Financial and Managerial Accounting: Information for Decisions
Financial and Managerial Accounting: Information for Decisions
6th Edition
ISBN: 9780078025761
Author: John J Wild, Ken Shaw Accounting Professor, Barbara Chiappetta Fundamental Accounting Principles
Publisher: McGraw-Hill Education
Question
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Chapter 1, Problem 2PSB

1.

a.

To determine

To compute:

The amount of equity, of V Company as on December 31, 2014.

1.

a.

Expert Solution
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Explanation of Solution

Given,

The amount of assets is $54,000.

The amount of liabilities is $25,000.

Formula to calculate equity is,

Equity=Assetsliabilities

Substitute$54,000 for assets and $25,000 for liabilities,

Equity=$54,000$25,000=$29,000

Hence, the amount of equity of V Company as on December 31, 2014 is $29,000.

b.

To determine

To compute:

The amount of equity, of V Company as on December 31, 2015.

b.

Expert Solution
Check Mark

Explanation of Solution

Given,

The amount of assets is $59,000.

The amount of liabilities is $36,000.

Formula to calculate equity is,

Equity=Assetsliabilities

Substitute$59,000 for assets and $36,000 for liabilities,

Equity=$59,000$36,000=$23,000

Hence, the amount of equity of V Company as on December 31, 2015 is $23,000.

c.

To determine

To compute:

The amount of net income or loss of V Company as on December 31, 2015.

c.

Expert Solution
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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,

Net Income=(Equity at the endEquity in the beginningIssue of stock+Dividend)

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,

Net Income=$23,000$29,000$5,000+$5,500=$28,500$34,000=($5,500)

Hence, the net loss of V Company as on December 31, 2015 is $5,500.

2.

a.

To determine

To compute:

The amount of equity, of W Company as on December 31, 2014.

2.

a.

Expert Solution
Check Mark

Explanation of Solution

Given,

The amount of assets is $80,000.

The amount of liabilities is $60,000.

Formula to calculate equity is,

Equity=Assetsliablities

Substitute$80,000 for assets and $60,000 for liabilities,

Equity=$80,000$60,000=$20,000

Hence, the amount of equity of W Company as on December 31, 2014 is $20,000.

b.

To determine

To compute:

The amount of equity, of W Company as on December 31, 2015.

b.

Expert Solution
Check Mark

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,

Equity at the end=(Equity in the beginning+Issue of stock+Net incomeDividend)

Substitute $20,000 for equity in the beginning,, $20,000 for issue of stock, $40,00 for net income, $2,000 for dividend,

Equity at the end=$20,000+$20,000+$40,000$2,000=$80,000$2,000=$78,000

Hence, the amount of equity of W Company as on December 31, 2015 is $78,000.

c.

To determine

To compute:

The amount of liabilities, of A Company as on December 31, 2015.

c.

Expert Solution
Check Mark

Explanation of Solution

Given,

The amount of assets is $100,000.

The amount of equity is $78,000.

Formula to calculate liabilities is,

Liabilities=AssetsEquity

Substitute$100,000 for assets and $78,000 for equity,

Liabilities=$100,000$78,000=$22,000

Hence, the amount of liabilities of W Company as on December 31, 2015 is $22,000.

3.

To determine

To compute:

The amount of stock issuance, of X Company as on December 31, 2015.

3.

Expert Solution
Check Mark

Explanation of Solution

Given,

The amount of equity is $73,000 of December 31, 2014.

The amount of equity is $120,700 of December 31, 2015.

Net income is $18,500.

Formula to calculate stock issuance is,

Stock Issuances=Equity at the endEquity in the beginningNet Income

Substitute $73,000 for equity in the beginning, $18,500 for net income, $120,700 for equity at the end,

Stock Issuances=$120,700$73,000$18,500=$29,200

Working Notes:

Calculation of the amount of equity as on December 31, 2014,

Equity=AssetsLiablities=$141,500$68,500=$73,000

Calculation of the amount of equity as on December 31, 2015,

Equity=AssetsLiablities=$186,500$65,800=$120,700

Hence, the amount of stock issuances of X Company as on December 31, 2015 is $29,200.

4.

To determine

To compute:

The amount of assets, of Y Company as on December 31, 2015.

4.

Expert Solution
Check Mark

Explanation of Solution

Given,

The amount of liabilities is $42,000 as on December 31, 2015.

The amount of equity is $93,100 as on December 31, 2015.

Formula to calculate assets is,

Assets=Liablities+Equity

Substitute$42,000 for liabilities and $93,100 for equity,

Assets=$42,000+$93,100=$135,100

Working notes:

Calculation of the amount of equity as on December 31, 2014,

Equity=Assetsliablities=$92,500$51,500=$41,000

Calculation of the amount of equity as on December 31, 2015,

Equity at the end=(Equity in the beginning+Issue of stock+Net incomeDividend)=$41,000+$48,100+$24,000$20,000=$113,100$20,000=$93,100

Hence, the amount of asset of Y Company as on December 31, 2015 is $135,100.

5.

To determine

To compute:

The amount of liabilities, of Z Company as on December 31, 2014.

5.

Expert Solution
Check Mark

Explanation of Solution

Given,

The amount of assets is $114,000 as on December 31, 2014.

The amount of equity is $44,000 as on December 31, 2014.

Formula to calculate equity is,

Liabilities=AssetsEquity

Substitute$119,000 for assets and $27,500 for equity,

Liabilities=$114,000$44,000=$70,000

Working Notes:

Calculation of the amount of equity as on December 31, 2015,

Equity=AssetsLiablities=$170,000$42,000=$128,000

Calculation of the amount of equity as on December 31, 2015,

Equity in the beginning=(Equity at the end+DividendIssuance of StockNet income)=$128,000+$8,000$60,000$32,000=$136,000$92,000=$44,000

Hence, the amount of liabilities of Z Company as on December 31, 2014 is $70,000.

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Chapter 1 Solutions

Financial and Managerial Accounting: Information for Decisions

Ch. 1 - Describe the internal role of accounting for...Ch. 1 - 7. Identify three types of services typically...Ch. 1 - Prob. 8DQCh. 1 - Prob. 9DQCh. 1 - 10. What are some accounting-related professions? Ch. 1 - Prob. 11DQCh. 1 - Prob. 12DQCh. 1 - Prob. 13DQCh. 1 - Prob. 14DQCh. 1 - Prob. 15DQCh. 1 - Prob. 16DQCh. 1 - Prob. 17DQCh. 1 - Prob. 18DQCh. 1 - Prob. 19DQCh. 1 - Prob. 20DQCh. 1 - Prob. 21DQCh. 1 - Prob. 22DQCh. 1 - Prob. 23DQCh. 1 - Prob. 24DQCh. 1 - Prob. 25DQCh. 1 - Prob. 26DQCh. 1 - Prob. 27DQCh. 1 - Define and explain return on assets.Ch. 1 - Prob. 29DQCh. 1 - Prob. 30DQCh. 1 - Prob. 31DQCh. 1 - Prob. 32DQCh. 1 - Prob. 33DQCh. 1 - Prob. 34DQCh. 1 - Prob. 35DQCh. 1 - Prob. 1QSCh. 1 - Prob. 2QSCh. 1 - Prob. 3QSCh. 1 - Prob. 4QSCh. 1 - Prob. 5QSCh. 1 - Prob. 6QSCh. 1 - Applying the accounting equation A1 Total assets...Ch. 1 - Applying the accounting equation A1 Use the...Ch. 1 - Prob. 9QSCh. 1 - Identifying effects of transactions using...Ch. 1 - Identifying effects of transactions using...Ch. 1 - Prob. 12QSCh. 1 - Prob. 13QSCh. 1 - Prob. 14QSCh. 1 - Prob. 15QSCh. 1 - Prob. 16QSCh. 1 - Prob. 17QSCh. 1 - Prob. 1ECh. 1 - Prob. 2ECh. 1 - Prob. 3ECh. 1 - Prob. 4ECh. 1 - Prob. 5ECh. 1 - Prob. 6ECh. 1 - Prob. 7ECh. 1 - Exercise 1-8 Using the accounting equation A1...Ch. 1 - Exercise 1-9 Using the accounting equation...Ch. 1 - Prob. 10ECh. 1 - Prob. 11ECh. 1 - Prob. 12ECh. 1 - Exercise 1-13 Identifying effects of transactions...Ch. 1 - Prob. 14ECh. 1 - Prob. 15ECh. 1 - Prob. 16ECh. 1 - Exercise 1-17 preparing a balance sheet P2 Use the...Ch. 1 - Prob. 18ECh. 1 - Prob. 19ECh. 1 - Prob. 20ECh. 1 - Prob. 21ECh. 1 - Prob. 1PSACh. 1 - Prob. 2PSACh. 1 - Prob. 3PSACh. 1 - Prob. 4PSACh. 1 - Prob. 5PSACh. 1 - Prob. 6PSACh. 1 - Prob. 7PSACh. 1 - Prob. 8PSACh. 1 - Prob. 9PSACh. 1 - Prob. 10PSACh. 1 - Prob. 11PSACh. 1 - Prob. 12PSACh. 1 - Prob. 13PSACh. 1 - Prob. 14PSACh. 1 - Prob. 1PSBCh. 1 - Prob. 2PSBCh. 1 - Prob. 3PSBCh. 1 - Prob. 4PSBCh. 1 - Prob. 5PSBCh. 1 - Prob. 6PSBCh. 1 - Prob. 7PSBCh. 1 - Prob. 8PSBCh. 1 - Prob. 9PSBCh. 1 - Prob. 10PSBCh. 1 - Prob. 11PSBCh. 1 - Prob. 12PSBCh. 1 - Prob. 13PSBCh. 1 - Prob. 14PSBCh. 1 - Prob. 1SPCh. 1 - Prob. 1BTNCh. 1 - Prob. 2BTNCh. 1 - Prob. 3BTNCh. 1 - Prob. 4BTNCh. 1 - Prob. 5BTNCh. 1 - Prob. 6BTNCh. 1 - Prob. 7BTNCh. 1 - Prob. 8BTNCh. 1 - Prob. 9BTN
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