Question

$25 $2 Q1: Compute the missing amount (?) for each company, amounts in millions. Balance sheet Gilbert Corp Mandy Co. Gurbir Inc. Beginning Assets $80 $ 40 Liabilities $ 43 $1 Share capital 59 $3 Retained earnings ? $ 12 SS Ending Assets ? S 42 $8 Liabilities $ 48 S24 Share capital ? SI Retained earnings ? Income statement Revenues S218 ? S 12 Expenses $ 210 S 152 Net income ? ? Retained Earnings: Beginning retained $28 S 12 SS camnings + Net Income ? 59 $4 -Dividends S(3) S (5) S (2) - Ending retained $ 33 $ 16 carnings $3 $33 $7 At the end of the year, which company has the: Highest net income? Highest percentage of net income to revenues? Q2: The manager of News Maker, Inc., prepared the company's Balance Sheet while the accountant was ill. The Balance Sheet contains numerous errors. In particular, the manager knew that the Balance Sheet should balance, so he plugged in the shareholders' equity amount needed to achieve this balance. The shareholders' equity amount is not correct. All other amounts are accurate. News Maker, Inc. Balance sheet For the Month Ended November 30, 20X6 Assets Liabilities Cash 7,000 Notes receivable Equipment 38.200 Interest expense 2.000 Accounts payable 5.000 Office supplies 700 Utilities expense 1,200 Accounts receivable 3.200 Advertising expense 200 Notes payable $6,000 Land 81.000 Total S 95.900 Salary expense 55,000 Shareholders' Equity Shareholders' equity Total assets $ 138,300 Total liabilities $ 138,300 62.400

Answer 1

Balance sheet Begining Assets Liabilities Share Capital Retained Earnings Gilbert Corp Mandy Co. Gurbir Inc. $ $ $ 80 40 8 43 25 1 9 3 2 28 12 5 8 Ending Assets Liabilities Share Capital Retained Earnings 84 48 42 24 2 16 3 33 0 1 7 Income Statement Revenues Expenses Net Income (Revenue - Expense) 218 210 161 152 12 8 100 8 28 00 Retained Earnings Beginning retained earnings + Net Income - Dividends - Ending Retained Earnings Percentage Of Net Income to Revenues 8 -3 12 9 -5 5 4 -2 7 33.33 33 16 5.59 3.67

Mandy Co. - $ 9 1 The Highest Net Income 2 Highest Percentage of Net Income Percentage of Net Income = Net Income / Revenues *100 = 4/12*100 = 33.33%

$ $ $ 7,000 3,200 14,600 $ 24,800 $ $ $ 38,200 81,000 700 New Maker Inc. Balance Sheet as at 30 November 20X6 Assets Current Assets: Cash at bank Accounts Receivable Note Receivable Total Current Assets Non-Current Assets: Equipment Land Office Supplies Total Non - Current Assets Total Assets Liabilities Current Liabilities: Accounts Payable Notes Payable Total Current Liabilities Total Non-Current Liabilities Total Liabilities Net Assets Equity Capital Add: Net Profit Total Equity $1,19,900 $1,44,700 $ $ 5,000 56,000 $ 61,000 $ $ 61,000 $ 83,700 83,700 $ $ $ 83,700

Answer: 2 The Financial Position of News Maker Inc. is better, because the Co. is financed by the Equity Shares rather than other Fund like loan, debentures etc. 3 List Of Accounts in incorrect Balance sheet Utilities Expense Advertising Expense Salary expnse Interest Expense $ $ $ $ Amount Correct Account to be shown 1,200 Debit side of Income Statement 200 Debit side of Income Statement 55,000 Debit side of Income Statement 2,000 Debit side of Income Statement

Note: Please comment if you have any doubt.Kindly give positive rating.