The value of equity.

Question

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Answer 1

Question

Chapter 1, Problem 9E

a.

To determine

To compute: The value of equity.

a.

Expert Solution

Explanation of Solution

Given,
The value of asset of A Company is $300,000 in the beginning of year
During the year asset increase $80,000.
The value of equity of A Company is $100,000 in the beginning of year.
The increase in liability of A Company is $50,000 during the year.

The formula to calculate equity is,

Equity=Assets−Liabilities

Substitute $380,000 for assets and $250,000 for liabilities,

Equity=$380,000−$250,000 =$130,000

Hence, the equity of A Company is $130,000.

Working Notes:

Calculation of change in equity due to increase in assets and liability

Change in Equity=Change in Assets−Change in Liabilities =$80,000−$50,000 =$30,000

Calculation of asset at the end of the year:

Asset at the end= Asset in the beggining+Addition during the year =$300,000+$80,000 =$380,000

Calculation of liabilities in the beginning of the year:
Liabilities in the beginning=( Asset in the beggining −Equity in the beginning ) =$300,000−$100,000 =$200,000

Calculation of liabilities at the end of the year is:

Liabilities at the end= Liabilities in the beggining+Addition during the year =$200,000+$50,000 =$250,000

b.

To determine

To compute: The value of equity.

b.

Expert Solution

Explanation of Solution

Given,
The value of asset of O is $123,000.
The value of liabilities of O is $47,000

The formula to calculate equity is,

Equity=Assets−Liabilities

Substitute $123,000 for assets and $47,000 for liabilities.

Equity=$123,000−$47,000 =$76,000

Hence, the equity of O is $130,000.

c.

To determine

To compute: Beginning and ending amount of equity

c.

Expert Solution

Explanation of Solution

Given,
The value of liability of Q Company is $70,000 in the beginning of year,
During the year liability decrease $5,000.
The value of asset of Q Company is $190,000 at the end of year
Increase of $60,000 during the year.

The formula to calculate equity is,

Equity=Assets−Liabilities

Beginning equity

Substitute $130,000 for assets in the beginning of year and $70,000 for liabilities in the beginning of year,

Equity=$130,000−$70,000 =$60,000

Ending equity

Substitute $190,000 for asset at the end and $65,000 for liabilities at the end in the above equation,

Equity=$190,000−$65,000 =$125,000

Hence, the value of equity of the Q Company in the beginning of the year is $60,000 and at the end is $125,000

Working Notes:

Calculate value of asset in the beginning of year:

Asset in the beggining= Asset at the end−Addition during the year =$190,000−$60,000 =$130,000

Calculation of change in equity due to increase in assets and liability

Change in Equity=Increase in Assets+Decrease in Liabilities =$60,000+$5,000 =$65,000

Calculation of Value of liabilities at the end is:

Liabilities at the end= Liabilities in the beggining−Decrease during the year =$70,000−$5,000 =$65,000

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Question 1Toodles Inc. had sales of $1,840,000. Cost of goods sold,administrative and selling expenses, and depreciation expenses were$1,180,000, $185,000 and $365,000 respectively. In addition, thecompany had an interest expense of $280,000 and a tax rate of 35percent. (Ignore any tax loss carry-back or carry-forward provisions.)Arrange the financial information for Toodles Inc. in an incomestatement and compute its OCF?

Answer 2

Question

Chapter 1, Problem 9E

a.

To determine

To compute: The value of equity.

a.

Expert Solution

Explanation of Solution

Given,
The value of asset of A Company is $300,000 in the beginning of year
During the year asset increase $80,000.
The value of equity of A Company is $100,000 in the beginning of year.
The increase in liability of A Company is $50,000 during the year.

The formula to calculate equity is,

Equity=Assets−Liabilities

Substitute $380,000 for assets and $250,000 for liabilities,

Equity=$380,000−$250,000 =$130,000

Hence, the equity of A Company is $130,000.

Working Notes:

Calculation of change in equity due to increase in assets and liability

Change in Equity=Change in Assets−Change in Liabilities =$80,000−$50,000 =$30,000

Calculation of asset at the end of the year:

Asset at the end= Asset in the beggining+Addition during the year =$300,000+$80,000 =$380,000

Calculation of liabilities in the beginning of the year:
Liabilities in the beginning=( Asset in the beggining −Equity in the beginning ) =$300,000−$100,000 =$200,000

Calculation of liabilities at the end of the year is:

Liabilities at the end= Liabilities in the beggining+Addition during the year =$200,000+$50,000 =$250,000

b.

To determine

To compute: The value of equity.

b.

Expert Solution

Explanation of Solution

Given,
The value of asset of O is $123,000.
The value of liabilities of O is $47,000

The formula to calculate equity is,

Equity=Assets−Liabilities

Substitute $123,000 for assets and $47,000 for liabilities.

Equity=$123,000−$47,000 =$76,000

Hence, the equity of O is $130,000.

c.

To determine

To compute: Beginning and ending amount of equity

c.

Expert Solution

Explanation of Solution

Given,
The value of liability of Q Company is $70,000 in the beginning of year,
During the year liability decrease $5,000.
The value of asset of Q Company is $190,000 at the end of year
Increase of $60,000 during the year.

The formula to calculate equity is,

Equity=Assets−Liabilities

Beginning equity

Substitute $130,000 for assets in the beginning of year and $70,000 for liabilities in the beginning of year,

Equity=$130,000−$70,000 =$60,000

Ending equity

Substitute $190,000 for asset at the end and $65,000 for liabilities at the end in the above equation,

Equity=$190,000−$65,000 =$125,000

Hence, the value of equity of the Q Company in the beginning of the year is $60,000 and at the end is $125,000

Working Notes:

Calculate value of asset in the beginning of year:

Asset in the beggining= Asset at the end−Addition during the year =$190,000−$60,000 =$130,000

Calculation of change in equity due to increase in assets and liability

Change in Equity=Increase in Assets+Decrease in Liabilities =$60,000+$5,000 =$65,000

Calculation of Value of liabilities at the end is:

Liabilities at the end= Liabilities in the beggining−Decrease during the year =$70,000−$5,000 =$65,000

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Answer 3

Question

Chapter 1, Problem 9E

a.

To determine

To compute: The value of equity.

a.

Expert Solution

Explanation of Solution

Given,
The value of asset of A Company is $300,000 in the beginning of year
During the year asset increase $80,000.
The value of equity of A Company is $100,000 in the beginning of year.
The increase in liability of A Company is $50,000 during the year.

The formula to calculate equity is,

Equity=Assets−Liabilities

Substitute $380,000 for assets and $250,000 for liabilities,

Equity=$380,000−$250,000 =$130,000

Hence, the equity of A Company is $130,000.

Working Notes:

Calculation of change in equity due to increase in assets and liability

Change in Equity=Change in Assets−Change in Liabilities =$80,000−$50,000 =$30,000

Calculation of asset at the end of the year:

Asset at the end= Asset in the beggining+Addition during the year =$300,000+$80,000 =$380,000

Calculation of liabilities in the beginning of the year:
Liabilities in the beginning=( Asset in the beggining −Equity in the beginning ) =$300,000−$100,000 =$200,000

Calculation of liabilities at the end of the year is:

Liabilities at the end= Liabilities in the beggining+Addition during the year =$200,000+$50,000 =$250,000

b.

To determine

To compute: The value of equity.

b.

Expert Solution

Explanation of Solution

Given,
The value of asset of O is $123,000.
The value of liabilities of O is $47,000

The formula to calculate equity is,

Equity=Assets−Liabilities

Substitute $123,000 for assets and $47,000 for liabilities.

Equity=$123,000−$47,000 =$76,000

Hence, the equity of O is $130,000.

c.

To determine

To compute: Beginning and ending amount of equity

c.

Expert Solution

Explanation of Solution

Given,
The value of liability of Q Company is $70,000 in the beginning of year,
During the year liability decrease $5,000.
The value of asset of Q Company is $190,000 at the end of year
Increase of $60,000 during the year.

The formula to calculate equity is,

Equity=Assets−Liabilities

Beginning equity

Substitute $130,000 for assets in the beginning of year and $70,000 for liabilities in the beginning of year,

Equity=$130,000−$70,000 =$60,000

Ending equity

Substitute $190,000 for asset at the end and $65,000 for liabilities at the end in the above equation,

Equity=$190,000−$65,000 =$125,000

Hence, the value of equity of the Q Company in the beginning of the year is $60,000 and at the end is $125,000

Working Notes:

Calculate value of asset in the beginning of year:

Asset in the beggining= Asset at the end−Addition during the year =$190,000−$60,000 =$130,000

Calculation of change in equity due to increase in assets and liability

Change in Equity=Increase in Assets+Decrease in Liabilities =$60,000+$5,000 =$65,000

Calculation of Value of liabilities at the end is:

Liabilities at the end= Liabilities in the beggining−Decrease during the year =$70,000−$5,000 =$65,000

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Answer 4

Question

Chapter 1, Problem 9E

a.

To determine

To compute: The value of equity.

a.

Expert Solution

Explanation of Solution

Given,
The value of asset of A Company is $300,000 in the beginning of year
During the year asset increase $80,000.
The value of equity of A Company is $100,000 in the beginning of year.
The increase in liability of A Company is $50,000 during the year.

The formula to calculate equity is,

Equity=Assets−Liabilities

Substitute $380,000 for assets and $250,000 for liabilities,

Equity=$380,000−$250,000 =$130,000

Hence, the equity of A Company is $130,000.

Working Notes:

Calculation of change in equity due to increase in assets and liability

Change in Equity=Change in Assets−Change in Liabilities =$80,000−$50,000 =$30,000

Calculation of asset at the end of the year:

Asset at the end= Asset in the beggining+Addition during the year =$300,000+$80,000 =$380,000

Calculation of liabilities in the beginning of the year:
Liabilities in the beginning=( Asset in the beggining −Equity in the beginning ) =$300,000−$100,000 =$200,000

Calculation of liabilities at the end of the year is:

Liabilities at the end= Liabilities in the beggining+Addition during the year =$200,000+$50,000 =$250,000

b.

To determine

To compute: The value of equity.

b.

Expert Solution

Explanation of Solution

Given,
The value of asset of O is $123,000.
The value of liabilities of O is $47,000

The formula to calculate equity is,

Equity=Assets−Liabilities

Substitute $123,000 for assets and $47,000 for liabilities.

Equity=$123,000−$47,000 =$76,000

Hence, the equity of O is $130,000.

c.

To determine

To compute: Beginning and ending amount of equity

c.

Expert Solution

Explanation of Solution

Given,
The value of liability of Q Company is $70,000 in the beginning of year,
During the year liability decrease $5,000.
The value of asset of Q Company is $190,000 at the end of year
Increase of $60,000 during the year.

The formula to calculate equity is,

Equity=Assets−Liabilities

Beginning equity

Substitute $130,000 for assets in the beginning of year and $70,000 for liabilities in the beginning of year,

Equity=$130,000−$70,000 =$60,000

Ending equity

Substitute $190,000 for asset at the end and $65,000 for liabilities at the end in the above equation,

Equity=$190,000−$65,000 =$125,000

Hence, the value of equity of the Q Company in the beginning of the year is $60,000 and at the end is $125,000

Working Notes:

Calculate value of asset in the beginning of year:

Asset in the beggining= Asset at the end−Addition during the year =$190,000−$60,000 =$130,000

Calculation of change in equity due to increase in assets and liability

Change in Equity=Increase in Assets+Decrease in Liabilities =$60,000+$5,000 =$65,000

Calculation of Value of liabilities at the end is:

Liabilities at the end= Liabilities in the beggining−Decrease during the year =$70,000−$5,000 =$65,000

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Answer 5

Chapter 1, Problem 9E

a.

To determine

To compute: The value of equity.

a.

Expert Solution

Explanation of Solution

Given,
The value of asset of A Company is $300,000 in the beginning of year
During the year asset increase $80,000.
The value of equity of A Company is $100,000 in the beginning of year.
The increase in liability of A Company is $50,000 during the year.

The formula to calculate equity is,

Equity=Assets−Liabilities

Substitute $380,000 for assets and $250,000 for liabilities,

Equity=$380,000−$250,000 =$130,000

Hence, the equity of A Company is $130,000.

Working Notes:

Calculation of change in equity due to increase in assets and liability

Change in Equity=Change in Assets−Change in Liabilities =$80,000−$50,000 =$30,000

Calculation of asset at the end of the year:

Asset at the end= Asset in the beggining+Addition during the year =$300,000+$80,000 =$380,000

Calculation of liabilities in the beginning of the year:
Liabilities in the beginning=( Asset in the beggining −Equity in the beginning ) =$300,000−$100,000 =$200,000

Calculation of liabilities at the end of the year is:

Liabilities at the end= Liabilities in the beggining+Addition during the year =$200,000+$50,000 =$250,000

b.

To determine

To compute: The value of equity.

b.

Expert Solution

Explanation of Solution

Given,
The value of asset of O is $123,000.
The value of liabilities of O is $47,000

The formula to calculate equity is,

Equity=Assets−Liabilities

Substitute $123,000 for assets and $47,000 for liabilities.

Equity=$123,000−$47,000 =$76,000

Hence, the equity of O is $130,000.

c.

To determine

To compute: Beginning and ending amount of equity

c.

Expert Solution

Explanation of Solution

Given,
The value of liability of Q Company is $70,000 in the beginning of year,
During the year liability decrease $5,000.
The value of asset of Q Company is $190,000 at the end of year
Increase of $60,000 during the year.

The formula to calculate equity is,

Equity=Assets−Liabilities

Beginning equity

Substitute $130,000 for assets in the beginning of year and $70,000 for liabilities in the beginning of year,

Equity=$130,000−$70,000 =$60,000

Ending equity

Substitute $190,000 for asset at the end and $65,000 for liabilities at the end in the above equation,

Equity=$190,000−$65,000 =$125,000

Hence, the value of equity of the Q Company in the beginning of the year is $60,000 and at the end is $125,000

Working Notes:

Calculate value of asset in the beginning of year:

Asset in the beggining= Asset at the end−Addition during the year =$190,000−$60,000 =$130,000

Calculation of change in equity due to increase in assets and liability

Change in Equity=Increase in Assets+Decrease in Liabilities =$60,000+$5,000 =$65,000

Calculation of Value of liabilities at the end is:

Liabilities at the end= Liabilities in the beggining−Decrease during the year =$70,000−$5,000 =$65,000

Answer 6

Chapter 1, Problem 9E

a.

To determine

To compute: The value of equity.

a.

Expert Solution

Explanation of Solution

Given,
The value of asset of A Company is $300,000 in the beginning of year
During the year asset increase $80,000.
The value of equity of A Company is $100,000 in the beginning of year.
The increase in liability of A Company is $50,000 during the year.

The formula to calculate equity is,

Equity=Assets−Liabilities

Substitute $380,000 for assets and $250,000 for liabilities,

Equity=$380,000−$250,000 =$130,000

Hence, the equity of A Company is $130,000.

Working Notes:

Calculation of change in equity due to increase in assets and liability

Change in Equity=Change in Assets−Change in Liabilities =$80,000−$50,000 =$30,000

Calculation of asset at the end of the year:

Asset at the end= Asset in the beggining+Addition during the year =$300,000+$80,000 =$380,000

Calculation of liabilities in the beginning of the year:
Liabilities in the beginning=( Asset in the beggining −Equity in the beginning ) =$300,000−$100,000 =$200,000

Calculation of liabilities at the end of the year is:

Liabilities at the end= Liabilities in the beggining+Addition during the year =$200,000+$50,000 =$250,000

Answer 7

Chapter 1, Problem 9E

a.

To determine

To compute: The value of equity.

Answer 8

a.

Expert Solution

Explanation of Solution

Given,
The value of asset of A Company is $300,000 in the beginning of year
During the year asset increase $80,000.
The value of equity of A Company is $100,000 in the beginning of year.
The increase in liability of A Company is $50,000 during the year.

The formula to calculate equity is,

Equity=Assets−Liabilities

Substitute $380,000 for assets and $250,000 for liabilities,

Equity=$380,000−$250,000 =$130,000

Hence, the equity of A Company is $130,000.

Working Notes:

Calculation of change in equity due to increase in assets and liability

Change in Equity=Change in Assets−Change in Liabilities =$80,000−$50,000 =$30,000

Calculation of asset at the end of the year:

Asset at the end= Asset in the beggining+Addition during the year =$300,000+$80,000 =$380,000

Calculation of liabilities in the beginning of the year:
Liabilities in the beginning=( Asset in the beggining −Equity in the beginning ) =$300,000−$100,000 =$200,000

Calculation of liabilities at the end of the year is:

Liabilities at the end= Liabilities in the beggining+Addition during the year =$200,000+$50,000 =$250,000

Answer 9

a.

Expert Solution

Answer 10

a.

Expert Solution

Answer 11

Expert Solution

Answer 12

b.

To determine

To compute: The value of equity.

b.

Expert Solution

Explanation of Solution

Given,
The value of asset of O is $123,000.
The value of liabilities of O is $47,000

The formula to calculate equity is,

Equity=Assets−Liabilities

Substitute $123,000 for assets and $47,000 for liabilities.

Equity=$123,000−$47,000 =$76,000

Hence, the equity of O is $130,000.

Answer 13

b.

To determine

To compute: The value of equity.

Answer 14

b.

Expert Solution

Explanation of Solution

Given,
The value of asset of O is $123,000.
The value of liabilities of O is $47,000

The formula to calculate equity is,

Equity=Assets−Liabilities

Substitute $123,000 for assets and $47,000 for liabilities.

Equity=$123,000−$47,000 =$76,000

Hence, the equity of O is $130,000.

Answer 15

b.

Expert Solution

Answer 16

b.

Expert Solution

Answer 17

Expert Solution

Answer 18

c.

To determine

To compute: Beginning and ending amount of equity

c.

Expert Solution

Explanation of Solution

Given,
The value of liability of Q Company is $70,000 in the beginning of year,
During the year liability decrease $5,000.
The value of asset of Q Company is $190,000 at the end of year
Increase of $60,000 during the year.

The formula to calculate equity is,

Equity=Assets−Liabilities

Beginning equity

Substitute $130,000 for assets in the beginning of year and $70,000 for liabilities in the beginning of year,

Equity=$130,000−$70,000 =$60,000

Ending equity

Substitute $190,000 for asset at the end and $65,000 for liabilities at the end in the above equation,

Equity=$190,000−$65,000 =$125,000

Hence, the value of equity of the Q Company in the beginning of the year is $60,000 and at the end is $125,000

Working Notes:

Calculate value of asset in the beginning of year:

Asset in the beggining= Asset at the end−Addition during the year =$190,000−$60,000 =$130,000

Calculation of change in equity due to increase in assets and liability

Change in Equity=Increase in Assets+Decrease in Liabilities =$60,000+$5,000 =$65,000

Calculation of Value of liabilities at the end is:

Liabilities at the end= Liabilities in the beggining−Decrease during the year =$70,000−$5,000 =$65,000

Answer 19

c.

To determine

To compute: Beginning and ending amount of equity

Answer 20

c.

Expert Solution

Explanation of Solution

Given,
The value of liability of Q Company is $70,000 in the beginning of year,
During the year liability decrease $5,000.
The value of asset of Q Company is $190,000 at the end of year
Increase of $60,000 during the year.

The formula to calculate equity is,

Equity=Assets−Liabilities

Beginning equity

Substitute $130,000 for assets in the beginning of year and $70,000 for liabilities in the beginning of year,

Equity=$130,000−$70,000 =$60,000

Ending equity

Substitute $190,000 for asset at the end and $65,000 for liabilities at the end in the above equation,

Equity=$190,000−$65,000 =$125,000

Hence, the value of equity of the Q Company in the beginning of the year is $60,000 and at the end is $125,000

Working Notes:

Calculate value of asset in the beginning of year:

Asset in the beggining= Asset at the end−Addition during the year =$190,000−$60,000 =$130,000

Calculation of change in equity due to increase in assets and liability

Change in Equity=Increase in Assets+Decrease in Liabilities =$60,000+$5,000 =$65,000

Calculation of Value of liabilities at the end is:

Liabilities at the end= Liabilities in the beggining−Decrease during the year =$70,000−$5,000 =$65,000