Brief Exercise 1-3 At the beginning of the year, Sielert Company had total asset

Question

Brief Exercise 1-3

At the beginning of the year, Sielert Company had total assets of $748,020 and total liabilities of $321,450. Answer the following questions.

(a) If total assets increased $170,360 during the year and total liabilities decreased $93,480, what is the amount of owner’s equity at the end of the year?

(b) During the year, total liabilities increased $116,030 and owner’s equity decreased $91,730. What is the amount of total assets at the end of the year?

(c) If total assets decreased $74,770 and owner’s equity increased $92,500 during the year, what is the amount of total liabilities at the end of the year?

Use the expanded accounting equation to answer each of the following questions.

(a) The liabilities of Roman Company are $86,310. Owner’s capital account is $149,300; drawings are $85,890; revenues, $439,720; and expenses, $306,070. What is the amount of Roman Company’s total assets?

(b) The total assets of Dylan Company are $59,060. Owner’s capital account is $24,170; drawings are $6,760; revenues, $42,940; and expenses, $36,940. What is the amount of the company’s total liabilities?

(c) The total assets of Capp Co. are $720,000 and its liabilities are equal to two-thirds of its total assets. What is the amount of Capp Co.’s owner’s equity?

Exercise 1-11

Two items are omitted from each of the following summaries of balance sheet and income statement data for two proprietorships for the year 2014, Garba’s Goods and Zahra Enterprises.

Determine the missing amounts.

Garba’s
Goods

Zahra
Enterprises

Explanation / Answer

Question based on Accounting equation : Accounting equation = Owners equity + Liabilities = Assets

(a) Owners Equity = Assets - Liabilities = $918,380 - 227,970 = 690,410

     Note:

     Assets = Beg. balance + increase = $748,020 + 170,360 = 918,380

    Liabilities = Beg. balance - decreasse = $321,450 - 93,480 = $227,970

(b) Total Assets = Owners equity + Liabilities = $598,680 + 237,480 = 1,036,160

      Note: Onwers equity = $690,410 - 91,730 = 598680

                Liabilities = $321,450 + 116,030 = 237,480

(c) Total Liabilities = Total assets - Owners equity = 673,250 - 782,910 = (109,660)

      Note:

      Assets = $748,020 - 74,770 = 673,250

      Owners equity = $690,410 + 92,500 = 782,910

2. (a) Roman company total assets should be equal to Total liabilities & Owners equity i.e $283,370

         Note; Total liabilitie & Owners equity = Liabilities $86,310 + Owners equity (149,300 - drawings 85,890 + Net income (Revenue 439,720 - expenses 306,070) = 86,310 + 197,060 = 283,370 = $283,370

(b) Total liabilities = Total assets - owners equity = Total assets 59,060 - Owners equity ( capital 24,170 - drawings 6,760 + (Revenue 42,940 - expenses 36,940) =$23,410; Hence, total liabilities $23,410

(c) Owners equity = Total assets - Total liabilities = $720,000 - (2/3 of 720,000) = 720,000 - 480,000 = 240,000

Exercise : 1 - 11

Zahra enterprizes Beg. Total liabilities = Beg.Total assets - Beg. Owners equity

                                                             = $183,438 - 113,760

Garba's goods Beg; Owners equity = Beg. Assets - Beg. liabilities = $156,420 - 120,870 = 35,550  

Garba's goods Additional Investment = End. bal. of owners equity + drawings - Beg. baalnce of owners equity - net incoem (ie. revenue - expenses) = $56,880 + 41,238 - 35,550 - 56,880 = 5,680; Hence, additional investment = $5,680

Zahra enterprizes Drawings at the end of the year = Opening owners equity + Additional investment + Net Income - Closing owners equity = $113,760 + 35,550 + (142,200 - 85,320) - 184,860

                                    = 113,760 + 35,550 + 56,880 - 184,860 = 21,330

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