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The below table represents the balances for three independent companies, you have to determine the value for each of the missing amounts
The below table represents the balances for three independent companies, you have to determine the value for each of the missing amounts. Company "A Company "B" Company "C" Balances as on January 15, 2019 Finish atte out of Time left 1: question Assets $140,000.00 $210,000.00 $100,000,00 Liabilities $60,000.00 Equity $100,000.00 $60,000.00 Assets $190,000.00 Balances as on December 31, 2019 $250,000.00 $160,000.00 $190,000.00 Liabilities $130.000,00 Equity $80,000.00 2019 Additional Financial Information $20.000.00 $13,000.00 Additional inwestment Dividends $12,000.00 $20,000.00 Total revenues $550,000.00 $750,000.00 5570,000.00 $800,000.00 $450,000.00 Total expenses
Expert Answer
Expert Solution
Accounting equaiton is
Assets = Liabilities + owner's equity
By using this equation the missing items are found in the excel sheet as follows, and the missing figure is highlighted in bold
| Balances on Jan.1.2019(opening balance) | ||||
| Company A | Company B | Company C | ||
| Assets | $140,000.00 | $210,000.00 | $160,000.00 | |
| Liabilities | $60,000.00 | $110,000.00 | $100,000.00 | |
| Equity | $80,000.00 | $100,000.00 | $60,000.00 |
| Balances on Dec.31.2019(closing balance) | |||
| Company A | Company B | Company C | |
| Assets | $190,000.00 | $250,000.00 | $190,000.00 |
| Liabilities | $110,000.00 | $160,000.00 | $60,000.00 |
| Equity | $80,000.00 | $90,000.00 | $130,000.00 |
The formula for changes in equity is
Closing balance = Opening balance + Additional investments - Drawings + Revenues - Expenses
So Additional Investments = Closing balance - opening balance + Drawings - Revenues + Expenses
opening balance of equity + Net income( - net loss) - Dividend = Closing balance of equity
Using above equation, the missing figures for additional information is calculated and highlighted in bold
| 2019 Additionl information | |||
| Company A | Company B | Company C | |
| Additional investment | $32,000.00 | $20,000.00 | $13,000.00 |
| Dividends | $12,000.00 | $40,000.00 | $20,000.00 |
| Total Revenues | $550,000.00 | $750,000.00 | $280,000.00 |
| Total Expenses | $570,000.00 | $800,000.00 | $450,000.00 |
| Opening balance of equity | $80,000.00 | $100,000.00 | $60,000.00 |
| Closing balance of equity | $80,000.00 | $90,000.00 | $130,000.00 |
| So as per the equation | |||
| Closing balance = Opening balance + Additional investments - Drawings + Revenues - Expenses | |||
| = 80000 + 20000-0+550000-570000 | |||
| = 650000 - 570000 | |||
| = 80000 for Company A | |||
| But Actual should be, Opening balance - net loss - dividend | |||
| = 80000 - 20000 -12000 | |||
| = 48000 | |||
| So additional investment = closing balance - actual balance | |||
| = 80000 - 48000 = 32000 | |||
| Closing balance = Opening balance + Additional investments - Drawings + Revenues - Expenses | |||
| = 100000 + 20000-0+750000-800000 | |||
| = 870000 - 800000 | |||
| = 70000 for Company B | |||
| But Actual should be, Opening balance - net loss - dividend | |||
| = 100000 - 50000 -(-40000) | |||
| = 140000 - 50000 = 90000 | |||
| So additional investment = Actual balance - closingl balance | |||
| = 90000 - 70000 = 20000 | |||
| So Revenues = Expenses -+ dividends - opening balance - c;losing balance. | |||
| = 450000 +20000 -60000 - 130000 | |||
| = 280000 for Company C |
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