Question

On December 1 of the current year, Rob Elliot invested $35,000 of his cash to form a proprietorship, GGE Enterprises. After all transactions have been entered into the accounting equation, the following are the ending balances for selected items on December 31. On that date, the financial statements were prepared. The statement of owner’s equity for GGE Enterprises reported Rob Elliot’s owner’s equity as of December 31 at $38,000. The balance sheet reported total liabilities and owner’s equity of $55,650. Accounts Accounts Rob Elliot, Rob Elliot, Fees Rent Supplies Utilities Wages Miscellaneous Cash Receivable Land Payable Capital Drawing Earned Expense Expense Expense Expense Expense ? $8,600 $16,500 ? ? $5,750.00 $26,750.00 $6,400.00 ? $4,650.00 $1,265.00 $460.00 Review the following questions. Place an ‘X’ in the box to indicate which financial statement(s) report the desired information. Enter the amount reported on the financial statement. Balance Income Statement of Sheet Statement Owner’s Equity Amount What are the total assets owned by GGE Enterprises? $ How much cash is being held by GGE Enterprises? X $ By what amount did Rob Elliot’s equity increase or decrease during the period? $ What is the amount of profit or loss during December? $ What were the total expenses for December? $ How much expense was reported for supplies? $ How much does GGE Enterprises owe to its creditors? $

Answer 1

Answer and Explanation:

The formula and the computation is shown below:

a. Total Assets = Total Liabilities and Owners’ Equity

Total Assets = $55,650

b. Total Assets = Cash + Accounts Receivable + Land

$55,650 = Cash + $8,600 + $16,500

Cash = $55,650 - $8,600 - $16,500

= $30,550

c. Increase in Owners’ Equity = Rob Elliot Capital on 31 December - Rob Elliot, Capital on 31 December

= $38,000 - $0

= $38,000

d. Increase in Owners’ Equity = Additional Investment during December + Net Income - Rob Elliot Drawing

= $38,000 = $35,000 + Net income - $5,750

Net income = $8,750

e. Net Income = Fees Earned - Total Expenses

$8,750 = $26,750 - Total expenses

Total expenses = $26,750 - $8,750

= $18,000

f. Total Expenses = Rent Expense + Supplies Expense + Utilities Expense + Wages Expense + Miscellaneous Expense

$18,000 = $6,400 + Supplies Expense + $4,650 + $1,265 + $460

Supplies expenses = $18,000 - $12,775

= $5,225

g. Total Liabilities and Owners’ Equity = Total Liabilities + Total Owners’ Equity

$55,650 = Total Liabilities + $38,000

Total liabilities = $17,000

Total Liabilities = Accounts Payable

Accounts Payable = $17,000

Amount owed to Creditors = Accounts Payable

Amount owed to Creditors = $17,000