Explore BrainMass
Share

Explore BrainMass

    Compute Value of Equity, Net Income, Retained Earnings

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    See the attached file.

    2-1 Total Assets
    Use the following information, compute total assets.

    Equipment . . . . . . . . . . . . . . . $10,000
    Accounts payable . . . . . . . . ....... 900
    Capital stock . . . . . . . . . . . . .... 1,500
    Cash . . . . . . . . . . . . . . . . . . ....... 800
    Loan payable . . . . . . . . . . . . ....9,000
    Wages payable . . . . . . . . . . . ......500
    Accounts receivable . . . . . . . ....1, 000
    Retained earnings . . . . . . . . . ....3, 400
    Inventory . . . . . . . . . . . . . . . . ...3,500

    2-2 Total Liabilities
    Refer to the data in PE 2-1. Compute total liabilities.

    2-3 Total Owners' Equity
    Refer to the data in PE 2-1. Compute total owners' equity.

    2-4 the Accounting Equation
    For the following four cases, use the accounting equation to compute the missing quantity.

    Assets Liabilities Owners' Equity
    Case a $10,000 $ 4,000 A
    Case B 8,000 B $3,500
    Case C 5,500 7,000
    Case D 13,000 15,000 D

    2-5 Balance Sheets
    Using the data in PE 2-1, prepare a balance sheet.

    2-6 Current Assets
    Using the following information, compute total current assets.

    Land . . . . . . . . . . . . . . . . . . . . $7,000
    Machinery . . . . . . . . . . . . . . . .. 1,300
    Accounts payable . . . . . . . . ....1,600
    Cash . . . . . . . . . . . . . . . . . . . . .....625
    Buildings . . . . . . . . . . . . . . . ....7,500
    Accounts receivable . . . . . . . ......800
    Retained earnings . . . . . . . . . ...2,200
    Inventory . . . . . . . . . . . . . . . . . . 2,100

    2-7 Current Liabilities
    Using the following information, compute total current liabilities.

    Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,000
    Loan payable (due in 14 months) . . . . . . . . . . ... 1,100
    Capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . 1,750
    Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400
    Mortgage payable (due in 30 years) . . . . . . . . . 10,000
    Loan payable (due in 6 months) . . . . . . . . . . . . .....250
    Accounts payable . . . . . . . . . . . . . . . . . . . . . . . .....700
    Retained earnings . . . . . . . . . . . . . . . . . . . . . . ....5,000

    2-8 Book Value and Market Value of Equity
    For the following four cases, compute (1) the book value of equity and (2) the market value of equity.

    Assets Liabilities Number of Shares of Market Price
    Stock Outstanding per Share
    Case A $ 10,000 $ 4,000 1,000 $15
    Case B 8,000 7,000 500 10
    Case C 13,500 5,500 300 20
    Case D 100,000 150,000 1,000 7

    2-9 Total Revenues
    Using the following information, compute total revenues. Caution: Not all of the items listed should be included in the computation of total revenues.

    Cost of goods sold . . . . . . . $10,200 Wages payable . . . . . . . . $ 475
    Interest revenue . . . . . . . . . . .....900 Accounts receivable . . . ... 950
    Advertising expense . . . . . . ...2,150 Retained earnings . . . . . . 6,400
    Cash . . . . . . . . . . . . . . . . . . ......700 Consulting revenue . . . . . 2,700
    Sales . . . . . . . . . . . . . . . . . 13,600

    2-10 Total Expenses
    Using the data in PE 2-9, compute total expenses. Caution: Not all of the items listed should be included in the computation of total expenses.

    2-11 Computation of Net Income
    For the following four cases, compute net income (or net loss). Caution: Not all of the items listed should be included in the computation of net income.

    Case a Case B Case C Case D
    Cost of goods sold $ 60,000 $ 30,000 $60,000 $110,000
    Interest expense 18,000 47,000 25,000 31,000
    Cash 3,000 4,500 2,100 6,000
    Retained earnings 50,000 15,000 31,000 70,000
    Sales 100,000 150,000 70,000 200,000
    Accounts payable 12,000 20,000 5,000 38,000
    Rent revenue 5,000 1,000 12,000 10,000
    Machinery 175,000 60,000 50,000 185,000

    2-12 Income Statement
    Using the following information, prepare an income statement.

    Cost of goods sold . . . . . . . . . $ 7,300
    Interest expense . . . . . . . . . . ... 1,200
    Wage expense . . . . . . . . . . . ...... 900
    Cash . . . . . . . . . . . . . . . . . . . . ....600
    Sales . . . . . . . . . . . . . . . . . . . . 12,000
    Accounts payable . . . . . . . . . . ...400
    Accounts receivable . . . . . . . . ...750
    Retained earnings . . . . . . . . . . . 3,300
    Income tax expense . . . . . . . . . ...800
    2-13 Computation of Ending Retained Earnings
    For the following four cases, compute the ending amount of retained earnings. Caution: Not all of the items listed should be included in the computation of ending retained earnings.

    Case a Case B Case C Case D
    Capital stock $ 60,000 $ 30,000 $60,000 $110,000
    Long-term loan payable 18,000 47,000 25,000 31,000
    Dividends 3,000 4,500 2,100 6,000
    Retained earnings
    (beginning) 50,000 15,000 31,000 70,000
    Inventory 100,000 150,000 70,000 200,000
    Cash 12,000 20,000 5,000 38,000
    Net income (loss) 5,000 1,000 12,000 (10,000)
    Machinery 175,000 60,000 50,000 185,000

    2-14 Expanded Accounting Equation
    For the following four cases, use the expanded accounting equation to compute the missing quantity.

    Assets Liabilities Capital Stock Retained Earnings
    Case A $23,000 $11,000 A $ 4,500
    Case B 17,500 B $ 4,500 3,600
    Case C C 14,000 11,000 27,000
    Case D 45,000 29,000 18,000 D

    2-25 Balance Sheet Preparation
    From the following data, prepare a classified balance sheet for Taylorsville Construction Company at December 31, 2009.

    Accounts payable . . . . . . . . . . . . . . . . . . . . . ... $ 74,300
    Accounts receivable . . . . . . . . . . . . . . . . . . . . . ..113,500
    Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 512,000
    Owners' equity, 1/1/09 . . . . . . . . . . . . . . . . . . ...314,300
    Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...153,600
    Distributions to owners during 2009 . . . . . . . . ...48,100
    Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......4,250
    Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .....90,000
    Mortgage payable . . . . . . . . . . . . . . . . . . . . . . ...423,400
    Net income for 2009 . . . . . . . . . . . . . . . . . . . . 109,450
    Owners' equity, 12/31/09 . . . . . . . . . . . . . . . .........?

    2-27 Income Statement Preparation
    The following selected information is taken from the records of Pickard and Associates.

    Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . $ 143,000
    Accounts receivable . . . . . . . . . . . . . . . . . . . . . . ....95,000
    Advertising expense . . . . . . . . . . . . . . . . . . . . . . ....14,500
    Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......63,000
    Supplies expense . . . . . . . . . . . . . . . . . . . . . . . . .....31,500
    Rent expense . . . . . . . . . . . . . . . . . . . . . . . . . . . .....12,000
    Utilities expense . . . . . . . . . . . . . . . . . . . . . . . . . ......2,500
    Income taxes (30% of income before taxes) . . . . ........?
    Miscellaneous expense . . . . . . . . . . . . . . . . . . . . ......5,100
    Owners' equity . . . . . . . . . . . . . . . . . . . . . . . . . . ...215,000
    Salaries expense . . . . . . . . . . . . . . . . . . . . . . . . ......78,000
    Fees (revenues) . . . . . . . . . . . . . . . . . . . . . . . . . ...476,000

    2-29 Retained Earnings Computations
    During 2009, Edgemont Corporation had revenues of $230,000 and expenses, including income taxes, of $190,000. On December 31, 2008, Edgemont had assets of $350,000, liabilities of $80,000, and capital stock of $210,000. Edgemont paid a cash dividend of $25,000 in 2009. No additional stock was issued. Compute the retained earnings on December 31, 2008, and 2009.

    2-32 Cash Flow Computations
    From the following selected data, compute:
    1. Net cash flow provided (used) by operating activities.
    2. Net cash flow provided (used) by investing activities.
    3. Net cash flow provided (used) by financing activities.
    4. Net increase (decrease) in cash during the year.
    5. The cash balance at the end of the year.

    Cash receipts from:
    Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $270,000
    Investments by owners . . . . . . . . . . . . . . . . . . . . . . . ..54,000
    Sale of building . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...90,000
    Proceeds from bank loan . . . . . . . . . . . . . . . . . . . . . .. 60,000
    Cash payments for:
    Wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..$ 82,000
    Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 3,000
    Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....4,000
    Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...36,000
    Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...67,000
    Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...20,000
    Repayment of principal on loan . . . . . . . . . . . . . . . . . .40,000
    Purchase of land . . . . . . . . . . . . . . . . . . . . . . . . . . . . .106,000
    Cash balance at beginning of year . . . . . . . . . . . . . . $386,000

    2-33 Cash Flow Classifications
    For each of the following items, indicate whether it would be classified and reported under the operating activities (OA), investing activities (IA), or financing activities (FA) section of a statement of cash flows:

    a. Cash receipts from selling merchandise
    b. Cash payments for wages and salaries
    c. Cash proceeds from sale of stock
    d. Cash purchase of equipment
    e. Cash dividends paid
    f. Cash received from bank loan
    g. Cash payments for inventory
    h. Cash receipts from services rendered
    i. Cash payments for taxes
    j. Cash proceeds from sale of property no longer needed as expansion site.

    © BrainMass Inc. brainmass.com October 10, 2019, 12:01 am ad1c9bdddf
    https://brainmass.com/business/accounting/accounting-equation-compute-value-equity-net-income-retained-earnings-275667

    Attachments

    Solution Preview

    2-1 Total Assets
    Use the following information, compute total assets
    Equipment . . . . . . . . . . . . . . . $10,000
    Accounts payable . . . . . . . . ....... 900
    Capital stock . . . . . . . . . . . . .... 1,500
    Cash . . . . . . . . . . . . . . . . . . ....... 800
    Loan payable . . . . . . . . . . . . . ...9,000
    Wages payable . . . . . . . . . . . ......500
    Accounts receivable . . . . . . . ....1,000
    Retained earnings . . . . . . . . . ....3,400
    Inventory . . . . . . . . . . . . . . . . ...3,500
    Name amount Type
    Equipment $10,000.00 Asset $10,000.00
    Accounts payable $900.00 Liabilities 0
    Capital stock $2,500.00 Equity 0
    Cash $800.00 Asset $800.00
    Loan payable $9,000.00 Liabilities 0
    Wages payable $500.00 Liabilities 0
    Accounts receivable $1,000.00 Asset $1,000.00
    Retained earnings $3,400.00 Equity 0
    Inventory $3,500.00 Asset $3,500.00
    Total assets $15,300.00

    2-2 Total Liabilities
    Refer to the data in PE 2-1. Compute total liabilities.
    Name Amount Type
    Equipment $10,000.00 Asset 0
    Accounts payable $900.00 Liabilities $900.00
    Capital stock $2,500.00 Equity 0
    Cash $800.00 Asset 0
    Loan payable $9,000.00 Liabilities $9,000.00
    Wages payable $500.00 Liabilities $500.00
    Accounts receivable $1,000.00 Asset 0
    Retained earnings $3,400.00 Equity 0
    Inventory $3,500.00 Asset 0
    Total assets $10,400.00

    2-3 Total Owners' Equity
    Refer to the data in PE 2-1. Compute total owners' equity.
    Name amount Type
    Equipment $10,000.00 Asset 0
    Accounts payable $900.00 Liabilities 0
    Capital stock $2,500.00 Equity $2,500.00
    Cash $800.00 Asset 0
    Loan payable $9,000.00 Liabilities 0
    Wages payable $500.00 Liabilities 0
    Accounts receivable $1,000.00 Asset 0
    Retained earnings $3,400.00 Equity $3,400.00
    Inventory $3,500.00 Asset 0
    Total assets $5,900.00
    2-4 The Accounting Equation
    For the following four cases, use the accounting equation to compute the missing quantity.

    Assets Liabilities Owners' Equity
    Case A $10,000 $ 4,000 A
    Case B 8,000 B $3,500
    Case C C 5,500 7,000
    Case D 13,000 15,000 D

    Accounting Equation: Assets = Equity + Liabilities
    Assets Equity Liabilities
    Case A $10,000.00 4,000 $6,000.00
    Case B $8,000.00 $4,500.00 $3,500.00
    Case C $12,500.00 5,500 $7,000.00
    Case D $13,000.00 15,000 -$2,000.00

    2-5 Balance Sheet
    Using the data in PE 2-1, prepare a balance sheet.
    Balance Sheet
    Assets: Liabilities:
    Cash $800.00 Accounts payable $900.00
    Accounts receivable $1,000.00 Wages payable $500.00
    Equipment $10,000.00 Loan payable $9,000.00
    Inventory $3,500.00
    Equity:
    Capital stock $1,500.00
    Retained earnings $3,400.00

    $15,300.00 $15,300.00

    2-6 Current Assets
    Using the following information, compute total current assets.
    Land . . . . . . . . . . . . . . . . . . . . $7,000
    Machinery . . . . . . . . . . . . . . . .. 1,300
    Accounts payable . . . . . . . . . . ..1,600
    Cash . . . . . . . . . . . . . . . . . . . . .....625
    Buildings . . . . . . . . . . . . . . . ....7,500
    Accounts receivable . . . . . . . ......800
    Retained earnings . . . . . . . . . ...2,200
    Inventory . . . . . . . . . . . . . . . . . .2,100
    Name Amount Type
    Land $7,000.00 Fixed asset 0
    Machinery $1,300.00 Fixed asset 0
    Accounts payable $1,600.00 Current liabilities 0
    Cash $625.00 Current assets $625.00
    Buildings $7,500.00 Fixed asset 0
    Accounts receivable $800.00 Current assets $800.00
    Retained earnings $2,200.00 Equity 0
    Inventory $2,100.00 Current assets $2,100.00
    Current assets $3,525.00

    2-7 Current Liabilities
    Using the following information, compute total current liabilities.
    Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,000
    Loan payable (due in 14 months) . . . . . . . . . . ... 1,100
    Capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . 1,750
    Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400
    Mortgage payable (due in 30 years) . . . . . . . . . 10,000
    Loan payable (due in 6 months) . . . . . . . . . . . . .....250
    Accounts payable . . . . . . . . . . . . . . . . . . . . . . . .....700
    Retained earnings . . . . . . . . . . . . . . . . . . . . . . . ...5,000
    Name Amount Type
    Inventory $9,000.00 Current assets 0
    loan payable $1,100.00 Long-term liabilities 0
    capital ...

    Solution Summary

    The expert computes the value of equity, net income and retained earnings. The total revenues are calculated.

    $2.19