Fill in the Blank Questions:
Basic Accounting Equation and Changes to Owners Equity

by Sinthu
(Canada)

Q: The summaries of balance sheet and income statement data follow.


Beginning of year:
Total assets $ 85,000
Total liabilities 62,000
Total owner’s equity ?

End of year:
Total assets 110,000
Total liabilities ?
Total owner’s equity 60,000

Changes during year in owner’s equity:
Investments by owner ?
Drawings 18,000
Total revenues 175,000
Total expenses 140,000

A:
Beginning of year:
If Assets = Owners Equity + Liabilities then
Owners Equity = Assets - Liabilities
= $85,000 - $62,000
= $23,000 Owners Equity

End of year:
If Assets = Owners Equity + Liabilities then
Liabilities = Assets - Owners Equity
= $110,000 - $60,000
= $50,000 Liabilities

Changes during year in owner’s equity:
For this final part of the question we need to reconstruct the
statement of owners equity or basically how equity at the end of the year is calculated starting with equity at the beginning of the year plus/minus changes during the year.

Opening Balance $23,000
Investments by owner ?
Drawings -$18,000
Total revenues +$175,000
Total expenses -$140,000
Closing Balance $60,000

Let's put this in a formula:
Closing Balance = Opening Balance + Investments - Drawings + Revenues - Expenses
Switching that around we get:
Investments = Closing Balance - Opening Balance + Drawings - Revenues + Expenses
= $60,000 - $23,000 + $18,000 - $175,000 + $140,000
= $20,000 Investments

Click here to post comments

Return to Ask a Question About This Lesson!.






Enjoying this Website?
Help Support it with a Donation

OR...





Advertise on ventoup.ru

privacy policy




Related pages


ledger samplesaccounting journal entries practice problemspetty cash transactions definitionthe adjusted trial balance is preparedaverage cost vs fifoaccrued revenues examplesaccounting eqautionaccounting basics booksdouble entry cash book formatproforma of balance sheetpurchase ledger control account exampledebtors definition1st puc accountancy notesaccounts payable entriessales returns and allowances journal entryassets equals liabilities plus capitaljournal posting accountingnormal balance debit or credithow to subtract vatcalculate vat amount from grossrestaurant balance sheet templateowners equity formulavat exclusive calculatorvalue added tax receivablenet income formulasinventory costing methodshow to compute gross incomeopposite of accrualaccounts payable financing activityformula to calculate weighted averagecorrecting trial balance errorsjournalizing transactions in accounting examplesbest book on financial accountinginvestment accounting journal entriesjournals on accountingaccounting p&l exampleaccounting textbook for high school10 steps of accounting cyclebad debt provision journalsales discounts income statementfundamental accounting principles answerswhat kind of account is prepaid rentaccounting wipwhat is a debtors control accountexamples of cash inflowsynonym for anonymousaccrude expenselearn accounting entriesgross profit formulassimple profit and loss statement templatecash budget layoutaccrual accounting journal entriesdefine drawings in accountingsynonym for ownerdebtors and creditors ledgeraccrued salaries and wagesaccounting ledger book formatin the accounting cycle the last step isaccounting ledger templatecash inflow statementinput output vatp&l sheet examplehow to compute gross salesfifo method calculationdouble entry for debit notejournal accountancyaptitude test for accountingcalculate owners equitymonthly profit and loss statement templatetypes of accrued expenses