Problem 1-2A Computing missing information using accounting knowledge L.O. A1, P1 [The following information applies to the questions displayed below.] The following table contains financial information from 5 different companies:

Problem 1-2A Computing missing information using accounting knowledge L.O. A1, P1

[The following information applies to the questions displayed below.]

The following table contains financial information from 5 different companies:

	Company A			Company B			Company C			Company D			Company E
December 31, 2010
Assets	$	44,000		$	34,320		$	28,160		$	78,320		$	120,120
Liabilities		36,080			24,024			15,206			54,040			?
December 31, 2011
Assets		47,000			33,840			?			85,540			129,720
Liabilities		?			23,011			15,430			41,059			102,478
During year 2011
Stock issuances		6,000			1,400			9,750			?			6,500
Net income (loss)		10,730			?			(769)			13,201			7,718
Cash dividends		3,500			2,000			5,875			0			11,000

Problem 1-2A Part 1

Required:

Answer the following questions about Company A (Omit the "$" sign in your response):

1a.	What is the amount of equity on December 31, 2010?

Amount of equity

$ 7,920

1b.	What is the amount of equity on December 31, 2011?

Amount of equity

$ 21,150

1c.	What is the amount of liabilities on December 31, 2011?

Amount of liabilities

$ 25,850

Explanation:

Company A: 

a.	Equity on December 31, 2010:
	Assets	$	44,000
	Liabilities		(36,080	)
	Equity	$	7,920
b.	Equity on December 31, 2011:
	Equity, December 31, 2010	$	7,920
	Plus stock issuances		6,000
	Plus net income		10,730
	Less cash dividends		(3,500	)
	Equity, December 31, 2011	$	21,150
c.	Amount of liabilities on December 31, 2011:
	Assets	$	47,000
	Equity		(21,150	)
	Liabilities	$	25,850

Problem 1-2A Part 2

Answer the following questions about Company B (Omit the "$" sign in your response):

2a.	What is the amount of equity on December 31, 2010?

Amount of equity

$ 10,296

2b.	What is the amount of equity on December 31, 2011?

Amount of equity

$ 10,829

2c.	What is net income for year 2011?

Net income

$ 1,133

 

Explanation:

Company B:

a. and b.

	12/31/2010				12/31/2011
Equity:
Assets	$	34,320			$	33,840
Liabilities		(24,024	)			(23,011	)
Equity	$	10,296				10,829

c.

Net income for 2011:
Equity, December 31, 2010	$	10,296
Plus stock issuances		1,400
Plus net income		?
Less cash dividends		(2,000	)
Equity, December 31, 2011	$	10,829

  

Therefore, net income must have been   $ 1,133.

Problem 1-2A Part 3

3.	Calculate the amount of assets for Company C on December 31, 2011. (Omit the "$" sign in your response)

Amount of Assets

$ 33,028

Explanation:

Company C:

First, calculate the beginning balance of equity:

	Dec. 31, 2010
Assets		$	28,160
Liabilities			(15,206	)
Equity		$	12,954

Next, find the ending balance of equity as follows:

Equity, December 31, 2010	$	12,954
Plus stock issuances		9,750
Plus net income		769
Less cash dividends		(5,875	)
Equity, December 31, 2011	$	17,598

Finally, find the ending amount of assets by adding the ending balance of equity to the ending balance of liabilities:

	Dec. 31, 2011
Liabilities		$	15,430
Equity			(17,598	)
Assets		$	33,028

Problem 1-2A Part 4

4.	Calculate the amount of stock issuances for Company D during year 2011. (Omit the "$" sign in your response):

Amount of stock issuances

$ 7,000

Explanation:

Company D:

First, calculate the beginning and ending owner’s equity balances:

	12/31/2010				12/31/2011
Assets	$	78,320			$	85,540
Liabilities		(54,040	)			(41,059	)
Equity	$	24,280				44,481

Then, find the amount of stock issuances during 2011:

Equity, December 31, 2010	$	24,280
Plus stock issuances		?
Plus net income		13,201
Less cash dividends		0
Equity, December 31, 2011	$	44,481

Thus, stock issuances must have been: $ 7,000

Problem 1-2A Part 5

5.	Calculate the amount of liabilities for Company E on December 31, 2010. (Omit the "$" sign in your response):

Amount of Liabilities

$ 96,096

Explanation:

Company E:

First, compute the balance of equity as of December 31, 2011:

 

Assets		$	129,720
Liabilities			(102,478	)
Equity		$	27,242

 

Next, find the beginning balance of equity as follows:

Equity, December 31, 2010	$	?
Plus stock issuances		6,500
Plus net income		7,718
Less cash dividends		(11,000	)
Equity, December 31, 2011	$	27,242

Thus, the beginning balance of equity was $24,024.

Finally, find the beginning amount of liabilities by subtracting the beginning balance of equity from the beginning balance of assets:

	Dec. 31, 2010
Assets		$	120,120
Equity			(24,024	)
Liabilities		$	96,096