Question

Question 1 Using the accounting equation, calculate the missing numbers: ASSETS Year 1 Cash $ 26,000 $ Accounts Receivable 18,000 $ Inventory $ 25,000 $ Prepaid Expenses $ 3,500 $ TOTAL ASSETS $ 72,500 $ Year 2 Year 2 28,350 $ 29,400 15,500 $ 31,575 $ 30,525 3,000 3,250 78,425$ LABILITIES Accounts Payable Notes Payable TOTAL LIABILITIES $ $ $ 6 990 $ 17,250 $ 23,840$ 16,000 $ S 12,550 3,500 16,050 $ SHAREHOLDERS EQUITY Common Shares Retained Eaming TOTAL SHAREHOLDERS EQUITY TOTAL LIABIUTIES & SHAREHOLDERS EQUITY S $ $ 6,000 $ $ $ $ 6,000 $ 47,550 $ 53,550 $ $ 6,000 58,000 64,000 80,050 Year 1 Retained Earnings: Total Shareholders' Equity: Total Liabilities & Shareholders' Equity: Year 2 Notes Payable: Total Liabilities:

Answer 1

Particulars	Calculation	Amount
Year 1
Total Liabilities and shareholders equity = Total Assets	NA	72,500
Total shareholders equity = Total liabilities and shareholders equity - Total Liabilities	72,500 - 23,840	48,660
Retained Earnings = Total shareholders equity - Common shares	48,660 - 6,000	42,660
Year 2
Total Liabilities and shareholders equity = Total Assets	NA	78,425
Total Liabilities = Total Liabilities and shareholders equity - Total Sharholders equity	78,425 - 53,550	24,875
Notes Payable = Total Liabilities - Accounts Payable	24,875 - 16,000	8,875
Year 3
Total Assets = Total Liabilities and shareholders equity	NA	80,050
Accounts receivable = Total assets - All other assets	80,050 - 29,400 - 30,525 - 3,250	16,875

ASSETS	Year 1 (in $)	Year 2 (in $)	Year 3 (in $)
Cash	26,000	28,350	29,400
Accounts Receivable	18,000	15,500	16,875
Inventory	25,000	31,575	30,525
Prepaid Expenses	3,500	3,000	3,250
TOTAL ASSETS	72,500	78,425	80,050
Liabilities
Accounts Payable	6,590	16,000	12,550
Notes Payable	17,250	8,875	3,500
TOTAL LIABILITIES	23,840	24,875	16,050
SHAREHOLDERS EQUITY
Common Shares	6,000	6,000	6,000
Retained Earnings	42,660	47,550	58,000
TOTAL SHAREHOLDERS EQUITY	48,660	53,550	64,000
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY	72,500	78,425	80,050