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# Accounting equation and Financials

(See attached file for full problem description)

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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 \$20,000 \$ 8,000 A \$ 3,500
Case B 16,000 B \$ 5,000 2,000
Case C C 11,000 14,000 32,000
Case D 46,000 30,000 20,000 D

Current Assets
Using the following information, compute total current assets.
Land . . . . . . . . . . . . . . . . \$ 9,000
Machinery . . . . . . . . . . . . 1,100
Accounts payable . . . . . . 1,750
Cash . . . . . . . . . . . . . . . . 400
Buildings . . . . . . . . . . . . 10,000
Accounts receivable . . . . 950
Retained earnings . . . . . . 1,000
Inventory . . . . . . . . . . . . 4,000

Book Value and Market Value of Equity
For the following four cases, compute the book value of equity.

Number of Shares Market Price
Assets Liabilities of 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

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 . . . . . \$ 9,000 Wages payable . . . . . . . . \$ 250
Interest revenue . . . . . . . . 1,100 Accounts receivable . . . . 700
Advertising expense . . . . 1,750 Retained earnings . . . . . . 1,000
Cash . . . . . . . . . . . . . . . . 400 Consulting revenue . . . . . 4,000
Sales . . . . . . . . . . . . . . . . 10,000

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

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 \$20,000 \$ 8,000 A \$ 3,500
Case B 16,000 B \$ 5,000 2,000
Case C C 11,000 14,000 32,000
Case D 46,000 30,000 20,000 D
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#### Solution Preview

See attached file for full problem description)

---
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 \$20,000 \$ 8,000 A \$ 3,500
Case B 16,000 B \$ 5,000 2,000
Case C C 11,000 14,000 32,000
Case D 46,000 30,000 20,000 D

Current Assets
Using the following information, compute total current assets.
Land . . . . . . . . . . . . . . . . \$ 9,000
Machinery . . . . . . . . . . . . 1,100
Accounts payable . . . . . . 1,750
Cash . . . . . . . . . . . . . . . . 400
Buildings . . . . . . . . . . . . 10,000
Accounts receivable . . . . 950
Retained earnings . . . . . . 1,000
Inventory . . . . . . . . . . . . 4,000

Book Value and Market Value of Equity
For the following four cases, compute the book ...

#### Solution Summary

This explains the computation of accounting equation, book value and market value of Equity and total revenues

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