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Ex. 126 At the beginning of the year, Yates Company had total assets of $1,050,000 and total liabilities of $600,000. Answer the following questions viewing.

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Presentation on theme: "Ex. 126 At the beginning of the year, Yates Company had total assets of $1,050,000 and total liabilities of $600,000. Answer the following questions viewing."— Presentation transcript:

1 Ex. 126 At the beginning of the year, Yates Company had total assets of $1,050,000 and total liabilities of $600,000. Answer the following questions viewing each situation as being independent of the others. (1)If total assets increased $350,000 during the year, and total liabilities decreased $150,000, what is the amount of owner's equity at the end of the year? (2)During the year, total liabilities increased $500,000 and owner's equity decreased $200,000. What is the amount of total assets at the end of the year? (3)If total assets decreased $90,000 and owner's equity increased $280,000 during the year, what is the amount of total liabilities at the end of the year?

2 Solution 126(5 min.) Total AssetsTotal LiabilitiesOwner's Equity Beginning$1,050,000$600,000 Change 350,000 (150,000) Ending$1,400,000–$450,000=$950,000 (1) Total AssetsTotal LiabilitiesOwner's Equity Beginning$1,050,000$ 600,000$450,000 Change 500,000 (200,000) Ending$1,350,000 (2)=$1,100,000+$250,000 Total AssetsTotal LiabilitiesOwner's Equity Beginning$1,050,000$600,000$450,000 Change (90,000) 280,000 Ending$ 960,000=$230,000 (3)+$730,000

3 Ex. 139 Prepare an income statement, an owner's equity statement, and a balance sheet for the dental practice of Carl Craft, DDS, from the items listed below for the month of September. Carl Craft, Capital, September 1$40,000 Accounts payable7,000 Equipment30,000 Service revenue24,000 Carl Craft, Drawings5,000 Dental supplies expense3,500 Cash6,000 Utilities expense700 Dental supplies2,800 Salaries expense7,000 Accounts receivable14,000 Rent expense2,000 CARL CRAFT, DDS Income Statement and Statement of owners equity and Balance Sheet For the Month Ended September 30, 2002

4 CARL CRAFT, DDS Income Statement For the Month Ended September 30, 2002 Revenues Service revenue $24,000 Expenses Salaries expense $7,000 Dental supplies expense 3,500 Rent expense 2,000 Utilities expense 700 Total expenses 13,200 Net income $10,800

5 CARL CRAFT, DDS Owner's Equity Statement For the Month Ended September 30, 2002 Carl Craft, Capital, September 1 $40,000 Add: Net income 10,800 50,800 Less: Drawings 5,000 Carl Craft, Capital, September 30 $45,800

6 CARL CRAFT, DDS Balance Sheet September 30, 2002 Assets Cash $ 6,000 Accounts receivable 14,000 Dental supplies 2,800 Equipment 30,000 Total assets $52,800 Liabilities and Owner's Equity Liabilities Accounts payable $ 7,000 Owner's Equity Carl Craft, Capital 45,800 Total liabilities and owner's equity $52,800


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