Question

One item is omitted in each of the following summaries of balance sheet and income statement data for the following four different proprietorships: Determine the missing amounts. Additional investment in the $ Revenue $ Withdrawals from the business $

Answer 1

The question involves finding the missing information in balance sheets and income statements for different proprietorships. The calculations include determining the merchandise balance and the current account balance, using basic accounting principles and known relationships between accounts.

Step-by-step explanation:

The question entails the task of completing missing information from summaries of balance sheets and income statements for proprietorships. The task requires an understanding of basic accounting principles, particularly balance sheets and income statements, which are crucial for determining the financial health of businesses. It includes calculations such as the merchandise balance and the current account balance.

To calculate the merchandise balance, you will need to consider the values of exports minus imports. The current account balance is broader, including the merchandise balance alongside net income from abroad and net current transfers. Thus, it reflects the net flow of goods, services, and unilateral transfers during the period.

The missing information can be found by using known accounting equations and the relationships between the different accounts. For example, the owner's equity at the end of the period can be calculated by adding the net income, additional investments, and subtracting any withdrawals from the business.

Answer 2

1. Freeman's additional investment = $135,000
2. Heyward's revenue = $235,000
3. Jones's withdrawals = $16,500
4. Ramirez's beginning assets = $149,000

Step-by-step explanation:

1) Freeman's equity at the beginning of the year = $540,000

Freeman's equity at the end of the year = $930,000

Equity increase = $390,000

Net income increased Freeman's equity by $330,000 (= $570,000 - $240,000)

Withdrawals decreased equity by ($75,000)

So additional investment: $330,000 - $75,000 + F = $390,000

additional investment = F = $135,000

2) Heyward's equity at the beginning of the year = $230,000

Heyward's equity at the end of the year = $455,000

Equity increase = $225,000

Net income increased Heyward's equity by Revenue - $128,000

Withdrawals decreased equity by ($32,000)

Additional investments increased equity by : $150,000

equity increase = net income - withdrawals + additional investments

$225,000 = R - $128,000 - $32,000 + $150,000

$225,000 = R - $10,000 ⇒ R = $235,000

3) Jones's equity at the beginning of the year = $34,000

Jones's equity at the end of the year = $20,000

Equity decrease = ($14,000)

Net income decreased Jones's equity by ($7,500)

Withdrawals decreased equity by W

Additional investments increased equity by : $10,000

equity decrease = net income - withdrawals + additional investments

-$14,000 = -$7,500 - W + $10,000

W = -$7,500 + $10,000 + $14,000 = $16,500

4) Ramirez's equity at the beginning of the year = A - $12,000

Ramirez's equity at the end of the year = $134,000

Equity change = $134,000 - A + $12,000 = $146,000 - A

Net income decreased Ramirez's equity by ($13,000)

Withdrawals decreased equity by $39,000

Additional investments increased equity by : $55,000

equity change = net income - withdrawals + additional investments

$146,000 - A = -$13,000 - $39,000 + $55,000

$146,000 - A = $3,000 ⇒ A = $149,000