Solution:
1.)
Debit ratio = Total liabilities / Total assets
Debit ratio = $182,000 / $274,000
= 0.664 =66.4 %
* Beginning total assets = Beginning total liabilities + Beginning total equity
=$262,000 = $182,000+ Beginning total equity
Beginning total equity = $262,000 - $182,000
=$80,000
Ending total assets = Ending total liabilities + Ending total equity
=$274,000 = Ending total liabilities +(Beginning equity + revenue - expenses - dividends)
$274,000 =Ending total liabilities +($80,000 + $107,000 - $83,000 - $12,000)
$274,000 = Ending total liabilities+($187,000 - $95,000)
$274,000 =Ending total liabilities +$92,000
Ending total liabilities =$274,000 - $92,000
=$182,000
2.)
Amount ($) | |
Cash invested by Andrea by issuing shares | $15,400 |
Prepaid insurance | - $4,000 |
Cash received for service | $7,600 |
Cash paid for rent | -$3400 |
Cash paid for office equipment | -$5000 |
Cash paid for utilities | -$465 |
Cash balance at the end of January | $10,135 |
*
2) The contribution of an asset doesn't involve the movement of cash outflow.
5.) Purchase of equipment on credit doesn't involve the moment of cash outflow.
6.) The services provided on account do not involve the movement of cash inflow.
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