ein cial shasemwent P1-5A Financial statement information about four different c
ID: 2330244 • Letter: E
Question
ein cial shasemwent P1-5A Financial statement information about four different companies is as follows amownes and prepane owner 42 1 Accounting in Action Psi Omega Beta Company Company Company Company 1o 4, 5) 80,000 90,000 41,000 $150,000 0) January 1. 2017 80,000 49,000 12,000170,000 82,000 10,000 Liabilities Owner's equity 90,000 40,000 December 31, 2017 100,000 151,000 72,000 Liabilities Owner's equity 60,000 50,000 Owners equity changes in year 15,000 10,000 500,000 8,000 Additional investment Drawings Total revenues Total expenses 12,000 15,000 350,000 333,000 410,000 385,000 350,000 instructions (a) Determine the missing amoxunts. (Hint: For example, to solve for (a), Assets -Liabilities- Owner's equity-$39,000.) ha Company. (b) Prepare the owner's equity statement for Alp (c)Write a memorandum explaining the sequence for preparing financial state- ments and the interrelationship of the owner's equity statement to the income statement and balance sheet. PROBLEMS: SET B AND SET C Visit the book's companion website, at www.wiley.com/college/weygandt, and choose the Student Companion site to access Problems: Set B and Set C. tions problem starts in this chapter and continues through Chap The business begins as a sole proprietorship and then evolves into a partnership finally a corporation. You also can find this problem at the book's companion vw COOKIE CREATIONS: AN ENTREPRENEURIAL JOURNEY CC1 Natalie Koebel spent much of her childhood learning the art of cookie-making from her grand- mother. They passed many happy hours mastering every type of cookie imaginable and later creating new recipes that were both healthy and delicious. Now at the start of her second year in college Natalie is investigating various possibilities for starting her own business as part of the requirements of the entrepreneurship program in which she is enrolled A long -time friend insists that Natalie has to somehow include cookies in her business plan. Ater a series of brainstorming sessions, Natalie settles on the idea of operating a sookio matina uhoo She will start on a part-time basis and offer herExplanation / Answer
(a) Owners Equity of Alpha = Assets - Liabilities = 80000 - 41000 = 39000
(b) Assets of Alpha = Owners Equity + Liabilities = 50000 + 60000 = 110000
(c) Additional Investment = Ending Equity - (Beginning Equity + Net earnings - Drawings )
= 50000 - ( 39000 + 17000 - 15000 ) = 9000
For Beta company
(d) Liabilities = Assets - Owners equity = 90000 - 40000 = 50000
(e) Owners Equity of Alpha = Assets - Liabilities = 112,000 - 72,000 = 40000
(f) Drawings = Beginning Equity + Additional Investment + Net earnings - Ending Equity
= 40000 + 8000 + 25000 - 40000 = 33000
PSL company
(g) Assets = Owner equity + Liabilities = 49000 + 80000 = 129000
(h) Liabilities = Assets - owners equity = 170000 - 82000 = 88000
(i) Net Income = Revenue - Expenses
35000 = Revenue - 350,000
Revenue = 385000
Net Income = Ending Equity + Drawings - ( Beginning Equity + Additional Investment)
= 82000 + 12000 - ( 49000 + 10000 ) = 94000 - 59000 = 35000
Omega company
(j) Liabilities = Assets - Owners equity = 150000 - 90000 = 60000
(k) Assets = Owners equity + Liabilities = 151000 + 100000 = 251,000
(l) Net Income = Revenue - Expenses
56000 = 500000 - Expenses
Expenses = 500,000 - 56000 = 444000
Net Income = Ending Equity + Drawings - ( Beginning Equity + Additional Investment)
= 151,000 + 10000 - ( 90000 + 15000) = 56000
Part - B
Owner's Equity statement ( Alpha company)
Part - C
The general sequence in preparation of financial statements ....... (1) Preparing the Income statement
(2) Statement of owners Equity and (3) Balance sheet.
Preparing the statement of owners equity brings the reconsiliation between the income statement and balance sheet by making adjustments that reflect change in ownership due to (1) Net earnings retained after withdrawals and (2) additional investments made that had already add value on the assets side
Owner's Equity (1/1/2017) 39000 Additional Investment 9000 Net Income 17000 Sub Total 65000 With drawals -15000 Owner's Equity (12/31/2017) 50000Related Questions
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