Question

10. The records of Felix Company show the following at December 31, 2018: Assets & Liabilities: Equity $ 67,000 11,000 Beginning Assets Liabilities Ending: Assets Liabilities Owner contribution Owner withdrawal Revenues Expenses 511,000 8,000 205,000 $ 46,000 34,000 Requirements: R1. Compute the missing amount for Felix Company. You will need to work through owner's equity. R2. Did Felix earn a net income or suffer a net loss for the year? Compute the amount.

Answer 1

Answer

• Requirement R1

Missing amount = Expenses = $ 252,000 Answer

--Working

	Beginning
A	Assets	$67,000
B	Liabilities	$11,000
C = A - B	Equity	$56,000
	Ending
A	Assets	$46,000
B	Liabilities	$34,000
C = A - B	Equity	$12,000

A [calculated above]	Beginning Equity	$56,000
B	Owner's contribution	$11,000
C	Owner's Withdrawal	$8,000
D	Revenues	$205,000
E [calculated above]	Ending Equity	$12,000
F = A+B-C+D-E	Expenses	$252,000

• Requirement R2

--Correct Answer = Felix SUFFERED a NET LOSS because amount of Expenses ($ 252000) is MORE than REVENUES ($ 205000)

Amount of Net Loss = 252000 – 205000 = $ 47,000