a. On January 1, Lumia Company’s liabilities are $65,000 and its equity is $45,000. On January 3, Lumia purchases and installs solar panel assets costing $15,000. For the panels, Lumia pays $6,500 cash and promises to pay the remainder of $8,500 in six months. What is the total of Lumia’s assets after the solar panel purchase?
b. On March 1, ABX Company’s assets are $105,000 and its liabilities are $35,000. On March 5, ABX is fined $17,500 for failing emission standards. ABX immediately pays the fine in cash. After the fine is paid, what is the amount of equity for ABX?
c. On August 1, Lola Company’s assets are
$35,000 and its liabilities are $15,000. On August 4, Lola issues a
sustainability report following SASB guidelines. Investors react
positively to this report. On August 5, a new investor contributes
$5,500 cash and $9,500 in equipment in exchange for Lola stock.
After the investment, what is the amount of equity for
Lola?
Homework Answers
| Part A | ||||||
| Assets | = | Liabilities | + | Equity | ||
| Beginning | $1,10,000 | = | $65,000 | + | $45,000 | |
| Change | $8,500 | = | $8,500 | + | $0 | |
| Ending | $1,18,500 | = | $73,500 | + | $45,000 | |
| Part B | ||||||
| Assets | = | Liabilities | + | Equity | ||
| Beginning | $1,05,000 | = | $35,000 | + | $70,000 | |
| Change | -$17,500 | = | $0 | + | -$17,500 | |
| Ending | $87,500 | = | $35,000 | + | $52,500 | |
| Part C | ||||||
| Assets | = | Liabilities | + | Equity | ||
| Beginning | $35,000 | = | $15,000 | + | $20,000 | |
| Change | $15,000 | = | $0 | + | $15,000 | |
| Ending | $50,000 | = | $15,000 | + | $35,000 | |
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