Question

Review the chapter explanations of the income statement and the balance sheet equations. Apply these equations in each of the following independent cases to compute the two missing amounts for each case. Assume that it is the end of the first full year of operations for the company. TIP: First identify the numerical relationships among the columns using the balance sheet and income statement equations. Then compute the missing amounts. (Losses should be indicated by a minus sign.) Independent Cases Total Revenues Total Expenses Net Income (Loss) Total Assets Total Liabilities Shareholders' Equity A $ 174,000 $ 139,200 $ 93,500 B 13,200 $ 219,000 191,000 124,000 123,000 100,000 91,200 C 83,500 35,500 D 91,000 31,500 19,400 (3,800) 126,000 63,500 E 129,000 87,500

Answer 1

Net income = Total revenue - Total Expenses

Total assets = Total liabilities + Shareholders equity.

Case A

Net income = 174,000 - 139,200

= $34,800

Shareholders equity = 219,000 - 93,500

=$125,500

Case B

Total revenue = Total expenses + Net Income

= 123,000 + 13,200

= $109,800

Total liabilities = Total assets - Shareholders equity

= 191,000 - 91,200

= $99,800

Case C

Net income = 83,500 - 100,000

= ($16,500)

Shareholders equity = 124,000 - 35,500

=$88,500

Case D

Total expenses = Total revenue - Net income

= 91,000 - 19,400

=$71,600

Total assets = 31,500 + 126,000

=$157,500

Case E

Total revenue = Total expenses - Net loss

= 129,000 - 3,800

=$125,200

Total assets = 87,500 + 63,500

= $151,000

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