Calculate the amount of retained earnings as of December 31, 2014.

Question

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Answer 1

Question

Chapter 1, Problem 7E

a.

To determine

Calculate the amount of retained earnings as of December 31, 2014.

a.

Expert Solution

Explanation of Solution

Accounting equation: Accounting equation is an accounting tool expressed in the form of equation, by creating a relationship between the resources or assets of a company, and claims on the resources by the creditors and the owners. Accounting equation is expressed as shown below:

Assets = Liabilities + Stockholders’ equity

Retained earnings:

Retained earnings are the portion of earnings kept by the business for the purpose of reinvestments, payment of debts, or for future growth.

The amount of retained earnings is calculated as follows:

Assets	=	Liabilities	+	Stockholders’ Equity
Cash	=	Note Payable	+	Common Stock	+	Retained Earnings
$156,000	=	$85,600	+	$52,400	+	$18,000 (1)

Table (1)

Working note 1:

Calculate the value of retained earnings:

Retained earnings =[Assets (cash)−Liabilities(Note payable)−Common stock]=$156,000−$85,600−$52,400=$18,000

b.

To determine

Create an accounting equation by recording the beginning account balance under appropriate elements.

b.

Expert Solution

Explanation of Solution

Accounting equation:

Accounting equation is an accounting tool expressed in the form of equation, by creating a relationship between the resources or assets of a company, and claims on the resources by the creditors and the owners. Accounting equation is expressed as shown below:

Assets = Liabilities + Stockholders’ equity

Create an accounting equation by recording the beginning account balance under appropriate elements:

Company P
Effect of 2014 Transactions on the Accounting Equation
Event	Assets	=	Liabilities	+	Stockholders’ Equity
Event	Cash	=	Notes Payable	+	Common Stock	+	Retained Earnings
Beginning Balances	$156,000	=	$85,600	+	$52,400	+	$18,000

Table (2)

c.

To determine

Recording the revenue, expense, and dividend events under the appropriate elements of the accounting equation created in the part b.

c.

Expert Solution

Explanation of Solution

Accounting equation:

Accounting equation is an accounting tool expressed in the form of equation, by creating a relationship between the resources or assets of a company, and claims on the resources by the creditors and the owners. Accounting equation is expressed as shown below:

Assets = Liabilities + Stockholders’ equity

Accounting equation is created and the beginning account balances of each account, revenue, expense, and dividend events are recorded in the following manner:

Company P
Effect of 2014 Transactions on the Accounting Equation
Event	Assets	=	Liabilities	+	Stockholders’ Equity
Event	Cash	=	Notes Payable	+	Common Stock	+	Retained Earnings
Beginning Balances	$156,000	=	$85,600	+	$52,400	+	$18,000
1. Earned Revenue	$36,000	=	NA	+	NA	+	$36,000
2. Paid expenses	($20,000)	=	NA	+	NA	+	($20,000)
3. Paid dividend	($3,000)	=	NA	+	NA	+	($3,000)
Ending Balance	$169,000	=	$85,600	+	$52,400	+	$31,000

Table (2)

d.

To determine

Prove the equality of the accounting equation as of December 31, 2015.

d.

Expert Solution

Explanation of Solution

Accounting equation: Accounting equation is an accounting tool expressed in the form of equation, by creating a relationship between the resources or assets of a company, and claims on the resources by the creditors and the owners.

Assets = Liabilities + Stockholders’ equity

Prove the equality of the accounting equation:

Cash ($)	=	Note Payable ($)	+	Common Stock ($)	+	Retained earnings ($)
169,000		85,600		52,400		31,000

Table (4)

Conclusion

Therefore, the equality of the accounting equation is proved.

e.

To determine

Identify the beginning and ending balances in the cash and common stock accounts and explain the reason for the beginning and ending balances of cash account being different while the beginning and ending balances of common stock being same.

e.

Expert Solution

Explanation of Solution

Cash: Cash represents the cash reserves available with the company at a point of time.

Common stock: These are the ordinary shares that a corporation issues to the investors in order to raise funds. In return, the investors receive a share of profit from the profits earned by the corporation in the form of dividend

The reason for the beginning and ending balances of cash account being different and the beginning and ending balances of common stock being same is explained as follows:

The cash account had the beginning and the ending balance of $156,000 and $169,000 respectively. The common stock account had beginning balance of $52,400 and this was not changed during the period. The accounting events of Company P during the 2015 affected only the cash account and did not affect the common stock account.

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Answer 2

Question

Chapter 1, Problem 7E

a.

To determine

Calculate the amount of retained earnings as of December 31, 2014.

a.

Expert Solution

Explanation of Solution

Accounting equation: Accounting equation is an accounting tool expressed in the form of equation, by creating a relationship between the resources or assets of a company, and claims on the resources by the creditors and the owners. Accounting equation is expressed as shown below:

Assets = Liabilities + Stockholders’ equity

Retained earnings:

Retained earnings are the portion of earnings kept by the business for the purpose of reinvestments, payment of debts, or for future growth.

The amount of retained earnings is calculated as follows:

Assets	=	Liabilities	+	Stockholders’ Equity
Cash	=	Note Payable	+	Common Stock	+	Retained Earnings
$156,000	=	$85,600	+	$52,400	+	$18,000 (1)

Table (1)

Working note 1:

Calculate the value of retained earnings:

Retained earnings =[Assets (cash)−Liabilities(Note payable)−Common stock]=$156,000−$85,600−$52,400=$18,000

b.

To determine

Create an accounting equation by recording the beginning account balance under appropriate elements.

b.

Expert Solution

Explanation of Solution

Accounting equation:

Accounting equation is an accounting tool expressed in the form of equation, by creating a relationship between the resources or assets of a company, and claims on the resources by the creditors and the owners. Accounting equation is expressed as shown below:

Assets = Liabilities + Stockholders’ equity

Create an accounting equation by recording the beginning account balance under appropriate elements:

Company P
Effect of 2014 Transactions on the Accounting Equation
Event	Assets	=	Liabilities	+	Stockholders’ Equity
Event	Cash	=	Notes Payable	+	Common Stock	+	Retained Earnings
Beginning Balances	$156,000	=	$85,600	+	$52,400	+	$18,000

Table (2)

c.

To determine

Recording the revenue, expense, and dividend events under the appropriate elements of the accounting equation created in the part b.

c.

Expert Solution

Explanation of Solution

Accounting equation:

Accounting equation is an accounting tool expressed in the form of equation, by creating a relationship between the resources or assets of a company, and claims on the resources by the creditors and the owners. Accounting equation is expressed as shown below:

Assets = Liabilities + Stockholders’ equity

Accounting equation is created and the beginning account balances of each account, revenue, expense, and dividend events are recorded in the following manner:

Company P
Effect of 2014 Transactions on the Accounting Equation
Event	Assets	=	Liabilities	+	Stockholders’ Equity
Event	Cash	=	Notes Payable	+	Common Stock	+	Retained Earnings
Beginning Balances	$156,000	=	$85,600	+	$52,400	+	$18,000
1. Earned Revenue	$36,000	=	NA	+	NA	+	$36,000
2. Paid expenses	($20,000)	=	NA	+	NA	+	($20,000)
3. Paid dividend	($3,000)	=	NA	+	NA	+	($3,000)
Ending Balance	$169,000	=	$85,600	+	$52,400	+	$31,000

Table (2)

d.

To determine

Prove the equality of the accounting equation as of December 31, 2015.

d.

Expert Solution

Explanation of Solution

Accounting equation: Accounting equation is an accounting tool expressed in the form of equation, by creating a relationship between the resources or assets of a company, and claims on the resources by the creditors and the owners.

Assets = Liabilities + Stockholders’ equity

Prove the equality of the accounting equation:

Cash ($)	=	Note Payable ($)	+	Common Stock ($)	+	Retained earnings ($)
169,000		85,600		52,400		31,000

Table (4)

Conclusion

Therefore, the equality of the accounting equation is proved.

e.

To determine

Identify the beginning and ending balances in the cash and common stock accounts and explain the reason for the beginning and ending balances of cash account being different while the beginning and ending balances of common stock being same.

e.

Expert Solution

Explanation of Solution

Cash: Cash represents the cash reserves available with the company at a point of time.

Common stock: These are the ordinary shares that a corporation issues to the investors in order to raise funds. In return, the investors receive a share of profit from the profits earned by the corporation in the form of dividend

The reason for the beginning and ending balances of cash account being different and the beginning and ending balances of common stock being same is explained as follows:

The cash account had the beginning and the ending balance of $156,000 and $169,000 respectively. The common stock account had beginning balance of $52,400 and this was not changed during the period. The accounting events of Company P during the 2015 affected only the cash account and did not affect the common stock account.

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Answer 3

Question

Chapter 1, Problem 7E

a.

To determine

Calculate the amount of retained earnings as of December 31, 2014.

a.

Expert Solution

Explanation of Solution

Accounting equation: Accounting equation is an accounting tool expressed in the form of equation, by creating a relationship between the resources or assets of a company, and claims on the resources by the creditors and the owners. Accounting equation is expressed as shown below:

Assets = Liabilities + Stockholders’ equity

Retained earnings:

Retained earnings are the portion of earnings kept by the business for the purpose of reinvestments, payment of debts, or for future growth.

The amount of retained earnings is calculated as follows:

Assets	=	Liabilities	+	Stockholders’ Equity
Cash	=	Note Payable	+	Common Stock	+	Retained Earnings
$156,000	=	$85,600	+	$52,400	+	$18,000 (1)

Table (1)

Working note 1:

Calculate the value of retained earnings:

Retained earnings =[Assets (cash)−Liabilities(Note payable)−Common stock]=$156,000−$85,600−$52,400=$18,000

b.

To determine

Create an accounting equation by recording the beginning account balance under appropriate elements.

b.

Expert Solution

Explanation of Solution

Accounting equation:

Accounting equation is an accounting tool expressed in the form of equation, by creating a relationship between the resources or assets of a company, and claims on the resources by the creditors and the owners. Accounting equation is expressed as shown below:

Assets = Liabilities + Stockholders’ equity

Create an accounting equation by recording the beginning account balance under appropriate elements:

Company P
Effect of 2014 Transactions on the Accounting Equation
Event	Assets	=	Liabilities	+	Stockholders’ Equity
Event	Cash	=	Notes Payable	+	Common Stock	+	Retained Earnings
Beginning Balances	$156,000	=	$85,600	+	$52,400	+	$18,000

Table (2)

c.

To determine

Recording the revenue, expense, and dividend events under the appropriate elements of the accounting equation created in the part b.

c.

Expert Solution

Explanation of Solution

Accounting equation:

Accounting equation is an accounting tool expressed in the form of equation, by creating a relationship between the resources or assets of a company, and claims on the resources by the creditors and the owners. Accounting equation is expressed as shown below:

Assets = Liabilities + Stockholders’ equity

Accounting equation is created and the beginning account balances of each account, revenue, expense, and dividend events are recorded in the following manner:

Company P
Effect of 2014 Transactions on the Accounting Equation
Event	Assets	=	Liabilities	+	Stockholders’ Equity
Event	Cash	=	Notes Payable	+	Common Stock	+	Retained Earnings
Beginning Balances	$156,000	=	$85,600	+	$52,400	+	$18,000
1. Earned Revenue	$36,000	=	NA	+	NA	+	$36,000
2. Paid expenses	($20,000)	=	NA	+	NA	+	($20,000)
3. Paid dividend	($3,000)	=	NA	+	NA	+	($3,000)
Ending Balance	$169,000	=	$85,600	+	$52,400	+	$31,000

Table (2)

d.

To determine

Prove the equality of the accounting equation as of December 31, 2015.

d.

Expert Solution

Explanation of Solution

Accounting equation: Accounting equation is an accounting tool expressed in the form of equation, by creating a relationship between the resources or assets of a company, and claims on the resources by the creditors and the owners.

Assets = Liabilities + Stockholders’ equity

Prove the equality of the accounting equation:

Cash ($)	=	Note Payable ($)	+	Common Stock ($)	+	Retained earnings ($)
169,000		85,600		52,400		31,000

Table (4)

Conclusion

Therefore, the equality of the accounting equation is proved.

e.

To determine

Identify the beginning and ending balances in the cash and common stock accounts and explain the reason for the beginning and ending balances of cash account being different while the beginning and ending balances of common stock being same.

e.

Expert Solution

Explanation of Solution

Cash: Cash represents the cash reserves available with the company at a point of time.

Common stock: These are the ordinary shares that a corporation issues to the investors in order to raise funds. In return, the investors receive a share of profit from the profits earned by the corporation in the form of dividend

The reason for the beginning and ending balances of cash account being different and the beginning and ending balances of common stock being same is explained as follows:

The cash account had the beginning and the ending balance of $156,000 and $169,000 respectively. The common stock account had beginning balance of $52,400 and this was not changed during the period. The accounting events of Company P during the 2015 affected only the cash account and did not affect the common stock account.

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Answer 4

Question

Chapter 1, Problem 7E

a.

To determine

Calculate the amount of retained earnings as of December 31, 2014.

a.

Expert Solution

Explanation of Solution

Accounting equation: Accounting equation is an accounting tool expressed in the form of equation, by creating a relationship between the resources or assets of a company, and claims on the resources by the creditors and the owners. Accounting equation is expressed as shown below:

Assets = Liabilities + Stockholders’ equity

Retained earnings:

Retained earnings are the portion of earnings kept by the business for the purpose of reinvestments, payment of debts, or for future growth.

The amount of retained earnings is calculated as follows:

Assets	=	Liabilities	+	Stockholders’ Equity
Cash	=	Note Payable	+	Common Stock	+	Retained Earnings
$156,000	=	$85,600	+	$52,400	+	$18,000 (1)

Table (1)

Working note 1:

Calculate the value of retained earnings:

Retained earnings =[Assets (cash)−Liabilities(Note payable)−Common stock]=$156,000−$85,600−$52,400=$18,000

b.

To determine

Create an accounting equation by recording the beginning account balance under appropriate elements.

b.

Expert Solution

Explanation of Solution

Accounting equation:

Accounting equation is an accounting tool expressed in the form of equation, by creating a relationship between the resources or assets of a company, and claims on the resources by the creditors and the owners. Accounting equation is expressed as shown below:

Assets = Liabilities + Stockholders’ equity

Create an accounting equation by recording the beginning account balance under appropriate elements:

Company P
Effect of 2014 Transactions on the Accounting Equation
Event	Assets	=	Liabilities	+	Stockholders’ Equity
Event	Cash	=	Notes Payable	+	Common Stock	+	Retained Earnings
Beginning Balances	$156,000	=	$85,600	+	$52,400	+	$18,000

Table (2)

c.

To determine

Recording the revenue, expense, and dividend events under the appropriate elements of the accounting equation created in the part b.

c.

Expert Solution

Explanation of Solution

Accounting equation:

Accounting equation is an accounting tool expressed in the form of equation, by creating a relationship between the resources or assets of a company, and claims on the resources by the creditors and the owners. Accounting equation is expressed as shown below:

Assets = Liabilities + Stockholders’ equity

Accounting equation is created and the beginning account balances of each account, revenue, expense, and dividend events are recorded in the following manner:

Company P
Effect of 2014 Transactions on the Accounting Equation
Event	Assets	=	Liabilities	+	Stockholders’ Equity
Event	Cash	=	Notes Payable	+	Common Stock	+	Retained Earnings
Beginning Balances	$156,000	=	$85,600	+	$52,400	+	$18,000
1. Earned Revenue	$36,000	=	NA	+	NA	+	$36,000
2. Paid expenses	($20,000)	=	NA	+	NA	+	($20,000)
3. Paid dividend	($3,000)	=	NA	+	NA	+	($3,000)
Ending Balance	$169,000	=	$85,600	+	$52,400	+	$31,000

Table (2)

d.

To determine

Prove the equality of the accounting equation as of December 31, 2015.

d.

Expert Solution

Explanation of Solution

Accounting equation: Accounting equation is an accounting tool expressed in the form of equation, by creating a relationship between the resources or assets of a company, and claims on the resources by the creditors and the owners.

Assets = Liabilities + Stockholders’ equity

Prove the equality of the accounting equation:

Cash ($)	=	Note Payable ($)	+	Common Stock ($)	+	Retained earnings ($)
169,000		85,600		52,400		31,000

Table (4)

Conclusion

Therefore, the equality of the accounting equation is proved.

e.

To determine

Identify the beginning and ending balances in the cash and common stock accounts and explain the reason for the beginning and ending balances of cash account being different while the beginning and ending balances of common stock being same.

e.

Expert Solution

Explanation of Solution

Cash: Cash represents the cash reserves available with the company at a point of time.

Common stock: These are the ordinary shares that a corporation issues to the investors in order to raise funds. In return, the investors receive a share of profit from the profits earned by the corporation in the form of dividend

The reason for the beginning and ending balances of cash account being different and the beginning and ending balances of common stock being same is explained as follows:

The cash account had the beginning and the ending balance of $156,000 and $169,000 respectively. The common stock account had beginning balance of $52,400 and this was not changed during the period. The accounting events of Company P during the 2015 affected only the cash account and did not affect the common stock account.

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Answer 5

Chapter 1, Problem 7E

a.

To determine

Calculate the amount of retained earnings as of December 31, 2014.

a.

Expert Solution

Explanation of Solution

Accounting equation: Accounting equation is an accounting tool expressed in the form of equation, by creating a relationship between the resources or assets of a company, and claims on the resources by the creditors and the owners. Accounting equation is expressed as shown below:

Assets = Liabilities + Stockholders’ equity

Retained earnings:

Retained earnings are the portion of earnings kept by the business for the purpose of reinvestments, payment of debts, or for future growth.

The amount of retained earnings is calculated as follows:

Assets	=	Liabilities	+	Stockholders’ Equity
Cash	=	Note Payable	+	Common Stock	+	Retained Earnings
$156,000	=	$85,600	+	$52,400	+	$18,000 (1)

Table (1)

Working note 1:

Calculate the value of retained earnings:

Retained earnings =[Assets (cash)−Liabilities(Note payable)−Common stock]=$156,000−$85,600−$52,400=$18,000

b.

To determine

Create an accounting equation by recording the beginning account balance under appropriate elements.

b.

Expert Solution

Explanation of Solution

Accounting equation:

Accounting equation is an accounting tool expressed in the form of equation, by creating a relationship between the resources or assets of a company, and claims on the resources by the creditors and the owners. Accounting equation is expressed as shown below:

Assets = Liabilities + Stockholders’ equity

Create an accounting equation by recording the beginning account balance under appropriate elements:

Company P
Effect of 2014 Transactions on the Accounting Equation
Event	Assets	=	Liabilities	+	Stockholders’ Equity
Event	Cash	=	Notes Payable	+	Common Stock	+	Retained Earnings
Beginning Balances	$156,000	=	$85,600	+	$52,400	+	$18,000

Table (2)

c.

To determine

Recording the revenue, expense, and dividend events under the appropriate elements of the accounting equation created in the part b.

c.

Expert Solution

Explanation of Solution

Accounting equation:

Accounting equation is an accounting tool expressed in the form of equation, by creating a relationship between the resources or assets of a company, and claims on the resources by the creditors and the owners. Accounting equation is expressed as shown below:

Assets = Liabilities + Stockholders’ equity

Accounting equation is created and the beginning account balances of each account, revenue, expense, and dividend events are recorded in the following manner:

Company P
Effect of 2014 Transactions on the Accounting Equation
Event	Assets	=	Liabilities	+	Stockholders’ Equity
Event	Cash	=	Notes Payable	+	Common Stock	+	Retained Earnings
Beginning Balances	$156,000	=	$85,600	+	$52,400	+	$18,000
1. Earned Revenue	$36,000	=	NA	+	NA	+	$36,000
2. Paid expenses	($20,000)	=	NA	+	NA	+	($20,000)
3. Paid dividend	($3,000)	=	NA	+	NA	+	($3,000)
Ending Balance	$169,000	=	$85,600	+	$52,400	+	$31,000

Table (2)

d.

To determine

Prove the equality of the accounting equation as of December 31, 2015.

d.

Expert Solution

Explanation of Solution

Accounting equation: Accounting equation is an accounting tool expressed in the form of equation, by creating a relationship between the resources or assets of a company, and claims on the resources by the creditors and the owners.

Assets = Liabilities + Stockholders’ equity

Prove the equality of the accounting equation:

Cash ($)	=	Note Payable ($)	+	Common Stock ($)	+	Retained earnings ($)
169,000		85,600		52,400		31,000

Table (4)

Conclusion

Therefore, the equality of the accounting equation is proved.

e.

To determine

Identify the beginning and ending balances in the cash and common stock accounts and explain the reason for the beginning and ending balances of cash account being different while the beginning and ending balances of common stock being same.

e.

Expert Solution

Explanation of Solution

Cash: Cash represents the cash reserves available with the company at a point of time.

Common stock: These are the ordinary shares that a corporation issues to the investors in order to raise funds. In return, the investors receive a share of profit from the profits earned by the corporation in the form of dividend

The reason for the beginning and ending balances of cash account being different and the beginning and ending balances of common stock being same is explained as follows:

The cash account had the beginning and the ending balance of $156,000 and $169,000 respectively. The common stock account had beginning balance of $52,400 and this was not changed during the period. The accounting events of Company P during the 2015 affected only the cash account and did not affect the common stock account.

Answer 6

Chapter 1, Problem 7E

a.

To determine

Calculate the amount of retained earnings as of December 31, 2014.

a.

Expert Solution

Explanation of Solution

Accounting equation: Accounting equation is an accounting tool expressed in the form of equation, by creating a relationship between the resources or assets of a company, and claims on the resources by the creditors and the owners. Accounting equation is expressed as shown below:

Assets = Liabilities + Stockholders’ equity

Retained earnings:

Retained earnings are the portion of earnings kept by the business for the purpose of reinvestments, payment of debts, or for future growth.

The amount of retained earnings is calculated as follows:

Assets	=	Liabilities	+	Stockholders’ Equity
Cash	=	Note Payable	+	Common Stock	+	Retained Earnings
$156,000	=	$85,600	+	$52,400	+	$18,000 (1)

Table (1)

Working note 1:

Calculate the value of retained earnings:

Retained earnings =[Assets (cash)−Liabilities(Note payable)−Common stock]=$156,000−$85,600−$52,400=$18,000

Answer 7

Chapter 1, Problem 7E

a.

To determine

Calculate the amount of retained earnings as of December 31, 2014.

Answer 8

a.

Expert Solution

Explanation of Solution

Accounting equation: Accounting equation is an accounting tool expressed in the form of equation, by creating a relationship between the resources or assets of a company, and claims on the resources by the creditors and the owners. Accounting equation is expressed as shown below:

Assets = Liabilities + Stockholders’ equity

Retained earnings:

Retained earnings are the portion of earnings kept by the business for the purpose of reinvestments, payment of debts, or for future growth.

The amount of retained earnings is calculated as follows:

Assets	=	Liabilities	+	Stockholders’ Equity
Cash	=	Note Payable	+	Common Stock	+	Retained Earnings
$156,000	=	$85,600	+	$52,400	+	$18,000 (1)

Table (1)

Working note 1:

Calculate the value of retained earnings:

Retained earnings =[Assets (cash)−Liabilities(Note payable)−Common stock]=$156,000−$85,600−$52,400=$18,000

Answer 9

a.

Expert Solution

Answer 10

a.

Expert Solution

Answer 11

Expert Solution

Answer 12

b.

To determine

Create an accounting equation by recording the beginning account balance under appropriate elements.

b.

Expert Solution

Explanation of Solution

Accounting equation:

Accounting equation is an accounting tool expressed in the form of equation, by creating a relationship between the resources or assets of a company, and claims on the resources by the creditors and the owners. Accounting equation is expressed as shown below:

Assets = Liabilities + Stockholders’ equity

Create an accounting equation by recording the beginning account balance under appropriate elements:

Company P
Effect of 2014 Transactions on the Accounting Equation
Event	Assets	=	Liabilities	+	Stockholders’ Equity
Event	Cash	=	Notes Payable	+	Common Stock	+	Retained Earnings
Beginning Balances	$156,000	=	$85,600	+	$52,400	+	$18,000

Table (2)

Answer 13

b.

To determine

Create an accounting equation by recording the beginning account balance under appropriate elements.

Answer 14

b.

Expert Solution

Explanation of Solution

Accounting equation:

Accounting equation is an accounting tool expressed in the form of equation, by creating a relationship between the resources or assets of a company, and claims on the resources by the creditors and the owners. Accounting equation is expressed as shown below:

Assets = Liabilities + Stockholders’ equity

Create an accounting equation by recording the beginning account balance under appropriate elements:

Company P
Effect of 2014 Transactions on the Accounting Equation
Event	Assets	=	Liabilities	+	Stockholders’ Equity
Event	Cash	=	Notes Payable	+	Common Stock	+	Retained Earnings
Beginning Balances	$156,000	=	$85,600	+	$52,400	+	$18,000

Table (2)

Answer 15

b.

Expert Solution

Answer 16

b.

Expert Solution

Answer 17

Expert Solution

Answer 18

c.

To determine

Recording the revenue, expense, and dividend events under the appropriate elements of the accounting equation created in the part b.

c.

Expert Solution

Explanation of Solution

Accounting equation:

Accounting equation is an accounting tool expressed in the form of equation, by creating a relationship between the resources or assets of a company, and claims on the resources by the creditors and the owners. Accounting equation is expressed as shown below:

Assets = Liabilities + Stockholders’ equity

Accounting equation is created and the beginning account balances of each account, revenue, expense, and dividend events are recorded in the following manner:

Company P
Effect of 2014 Transactions on the Accounting Equation
Event	Assets	=	Liabilities	+	Stockholders’ Equity
Event	Cash	=	Notes Payable	+	Common Stock	+	Retained Earnings
Beginning Balances	$156,000	=	$85,600	+	$52,400	+	$18,000
1. Earned Revenue	$36,000	=	NA	+	NA	+	$36,000
2. Paid expenses	($20,000)	=	NA	+	NA	+	($20,000)
3. Paid dividend	($3,000)	=	NA	+	NA	+	($3,000)
Ending Balance	$169,000	=	$85,600	+	$52,400	+	$31,000

Table (2)

Answer 19

c.

To determine

Recording the revenue, expense, and dividend events under the appropriate elements of the accounting equation created in the part b.

Answer 20

c.

Expert Solution

Explanation of Solution

Accounting equation:

Accounting equation is an accounting tool expressed in the form of equation, by creating a relationship between the resources or assets of a company, and claims on the resources by the creditors and the owners. Accounting equation is expressed as shown below:

Assets = Liabilities + Stockholders’ equity

Accounting equation is created and the beginning account balances of each account, revenue, expense, and dividend events are recorded in the following manner:

Company P
Effect of 2014 Transactions on the Accounting Equation
Event	Assets	=	Liabilities	+	Stockholders’ Equity
Event	Cash	=	Notes Payable	+	Common Stock	+	Retained Earnings
Beginning Balances	$156,000	=	$85,600	+	$52,400	+	$18,000
1. Earned Revenue	$36,000	=	NA	+	NA	+	$36,000
2. Paid expenses	($20,000)	=	NA	+	NA	+	($20,000)
3. Paid dividend	($3,000)	=	NA	+	NA	+	($3,000)
Ending Balance	$169,000	=	$85,600	+	$52,400	+	$31,000

Table (2)

Answer 21

c.

Expert Solution

Answer 22

c.

Expert Solution

Answer 23

Expert Solution

Answer 24

d.

To determine

Prove the equality of the accounting equation as of December 31, 2015.

d.

Expert Solution

Explanation of Solution

Accounting equation: Accounting equation is an accounting tool expressed in the form of equation, by creating a relationship between the resources or assets of a company, and claims on the resources by the creditors and the owners.

Assets = Liabilities + Stockholders’ equity

Prove the equality of the accounting equation:

Cash ($)	=	Note Payable ($)	+	Common Stock ($)	+	Retained earnings ($)
169,000		85,600		52,400		31,000

Table (4)

Conclusion

Therefore, the equality of the accounting equation is proved.

Answer 25

d.

To determine

Prove the equality of the accounting equation as of December 31, 2015.

Answer 26

d.

Expert Solution

Explanation of Solution

Accounting equation: Accounting equation is an accounting tool expressed in the form of equation, by creating a relationship between the resources or assets of a company, and claims on the resources by the creditors and the owners.

Assets = Liabilities + Stockholders’ equity

Prove the equality of the accounting equation:

Cash ($)	=	Note Payable ($)	+	Common Stock ($)	+	Retained earnings ($)
169,000		85,600		52,400		31,000

Table (4)

Answer 27

d.

Expert Solution

Answer 28

d.

Expert Solution

Answer 29

Expert Solution

Answer 30

Conclusion

Therefore, the equality of the accounting equation is proved.

Answer 31

e.

To determine

Identify the beginning and ending balances in the cash and common stock accounts and explain the reason for the beginning and ending balances of cash account being different while the beginning and ending balances of common stock being same.

e.

Expert Solution

Explanation of Solution

Cash: Cash represents the cash reserves available with the company at a point of time.

Common stock: These are the ordinary shares that a corporation issues to the investors in order to raise funds. In return, the investors receive a share of profit from the profits earned by the corporation in the form of dividend

The reason for the beginning and ending balances of cash account being different and the beginning and ending balances of common stock being same is explained as follows:

The cash account had the beginning and the ending balance of $156,000 and $169,000 respectively. The common stock account had beginning balance of $52,400 and this was not changed during the period. The accounting events of Company P during the 2015 affected only the cash account and did not affect the common stock account.

Answer 32

e.

To determine

Identify the beginning and ending balances in the cash and common stock accounts and explain the reason for the beginning and ending balances of cash account being different while the beginning and ending balances of common stock being same.

Answer 33

e.

Expert Solution

Explanation of Solution

Cash: Cash represents the cash reserves available with the company at a point of time.

Common stock: These are the ordinary shares that a corporation issues to the investors in order to raise funds. In return, the investors receive a share of profit from the profits earned by the corporation in the form of dividend

The reason for the beginning and ending balances of cash account being different and the beginning and ending balances of common stock being same is explained as follows:

The cash account had the beginning and the ending balance of $156,000 and $169,000 respectively. The common stock account had beginning balance of $52,400 and this was not changed during the period. The accounting events of Company P during the 2015 affected only the cash account and did not affect the common stock account.