Question

Two items are omitted from each of the following summaries of the balance sheet and income statement data for two corporations for the year 2017, Plunkett Co. and Herring Enterprises. Determine the missing amounts. Plunkett Co. Herring Enterprises Beginning of year: Total assets $143,560 $190,920 Total liabilities 125,800 Entry field with correct answer 79920 (c) Total stockholders’ equity Entry field with correct answer 17760 (a) 111,000 End of year: Total assets 236,800 266,400 Total liabilities 177,600 74,000 Total stockholders’ equity 59,200 192,400 Changes during year in stockholders’ equity: Additional investment Entry field with incorrect answer 612720 (b) 37,000 Dividends 35,520 Entry field with incorrect answer 1211 (d) Total revenues 318,200 148,000 Total expenses 259,000 81,400

Answer 1

I have highlighted the two figures in the table below with red color which i have taken wrong while answering the question at the first time. Kindly accept my apologies for having supplied incorrect information. Please consider my right answer now.

Solution :-

Dual Aspect concept states that every business transaction affects two or more accounts in such a way that the total amount of debit side is equal to total amount of credit side while recording the concerned business transaction in the books of accounts. On the basis of this concept accounting equation is developed.

Basic Accounting Equation : Equity + Liabilities = Assets

Applying the above accounting equation we can find the missing values -

(a). Beginning Stockholders' Equity = Beginning Assets - Beginning Liabilities

Beginning Stockholders' Equity = $143,560 - $125,800

Beginning Stockholders' Equity = $17,760

(b). Ending Stockholders' Equity = Beginning Stockholders' Equity + Total Revenues - Total Expenses - Dividends + Changes in Stockholders' Equity Additional Investment

$59,200 = $17,760 + $318,200 - $259,000 - $35,520 + Changes in Stockholders' Equity Additional Investment

Changes in Stockholders' Equity Additional Investment = $17,760

(c). Beginning Liabilities = Beginning Assets - Beginning Stockholders' Equity

Beginning Liabilities = $190,920 - $111,000

Beginning Liabilities = $ 79,920

(d). Ending Stockholders' Equity = Beginning Stockholders' Equity + Total Revenues - Total Expenses - Dividends + Changes in Stockholders' Equity Additional Investment

192,400 = $111,000 + $148,000 - $81,400 - Dividends + $37,000

Dividends = $22,200