Question

he Logan Company reported the following ending information after its first month of operations: Revenues $168,000 Inventory $18,600 Equipment ? Cash 22,800 Dividends 1,000 Payroll expense 110,000 Common stock 58,000 Notes payable 10,000 Rent expense 30,200 What amount of equipment would the company report in its financial statements?

Answer 1

To find the equipment value, one must use the accounting equation, Assets = Liabilities + Equity. The total liabilities and equity are found by summing notes payable, common stock, and retained earnings. Equipment value is then calculated by subtracting cash and inventory from the total liabilities and equity.

Step-by-step explanation:

The student's question pertains to calculating the value of equipment on a company's financial statement when given various financial data points. The missing equipment value can be deduced by using the accounting equation, Assets = Liabilities + Equity. To determine the value of equipment, the following steps should be taken:

Calculate total liabilities and equity by adding together notes payable, common stock, and retained earnings (which include revenues minus expenses and dividends).

Then, calculate total assets by adding cash, inventory, and the yet-to-be-determined equipment value.

Since Assets = Liabilities + Equity, rearrange the equation to solve for the equipment value:

1. Equipment = Total Assets - (Cash + Inventory).
2. Find the total expenses by adding payroll expense and rent expense, then subtract dividends from the difference between revenues and total expenses to get retained earnings.
3. Finally, add notes payable and common stock to retained earnings to get total liabilities and equity.

Now that we have the detailed steps, let's apply them to the provided data:

• Total expenses would be payroll expense plus rent expense = $110,000 + $30,200 = $140,200.

• Retained earnings would be revenues minus total expenses minus dividends = $168,000 - $140,200 - $1,000 = $26,800.

• Total liabilities and equity would be notes payable plus common stock plus retained earnings = $10,000 + $58,000 + $26,800 = $94,800.

• Finally, the equipment value can be calculated as Total Assets - (Cash + Inventory) = Total Liabilities and Equity - (Cash + Inventory) = $94,800 - ($22,800 + $18,600) = $53,400.

Therefore, Logan Company would report an equipment value of $53,400 on its financial statements.

Answer 2

$53,400

Step-by-step explanation:

The computation of the equipment is shown below:

First we have to calculate the net income, retained earning balance that are shown below:

As we know that

Net income = Revenues - Rent expense - Payroll expense

= $168,000 - $30,200 - $110,000

= $27,800

Now the retained earning is

= Net income - dividend paid

= $27,800 - $1,000

= $26,800

And, the accounting equation is

Total assets = Liabilities + Stockholder's Equity

where,

Total assets = Equipment + Inventory + Cash

= Equipment + $18,600 + $22,800

= Equipment + $41,400

Liabilities = Note payable

= $10,000

Stockholder's Equity = Common stock + Retained earnings

= $58,000 + $26,800

= $84,800

Now the equipment is

Equipment + $41,400 = $10,000 + $84,800

So, the equipment is $53,400