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Ex. 139

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Ex. 139

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  1. Ex. 126At the beginning of the year, Yates Company had total assets of $1,050,000 and total liabilities of $600,000. Answer the following questions viewing each situation as being independent of the others.(1) If total assets increased $350,000 during the year, and total liabilities decreased $150,000, what is the amount of owner's equity at the end of the year?(2) During the year, total liabilities increased $500,000 and owner's equity decreased $200,000. What is the amount of total assets at the end of the year?(3) If total assets decreased $90,000 and owner's equity increased $280,000 during the year, what is the amount of total liabilities at the end of the year?

  2. Solution 126 (5 min.)Total AssetsTotal LiabilitiesOwner's EquityBeginning $1,050,000 $600,000Change 350,000 (150,000)Ending $1,400,000 – $450,000 = $950,000 (1)Total AssetsTotal LiabilitiesOwner's EquityBeginning $1,050,000 $ 600,000 $450,000Change 500,000 (200,000)Ending $1,350,000 (2) = $1,100,000 + $250,000Total AssetsTotal LiabilitiesOwner's EquityBeginning $1,050,000 $600,000 $450,000Change (90,000) 280,000Ending $ 960,000 = $230,000 (3) + $730,000

  3. Ex. 139 • Prepare an income statement, an owner's equity statement, and a balance sheet for the dental practice of Carl Craft, DDS, from the items listed below for the month of September. • Carl Craft, Capital, September 1 $40,000 • Accounts payable 7,000 • Equipment 30,000 • Service revenue 24,000 • Carl Craft, Drawings 5,000 • Dental supplies expense 3,500 • Cash 6,000 • Utilities expense 700 • Dental supplies 2,800 • Salaries expense 7,000 • Accounts receivable 14,000 • Rent expense 2,000 • CARL CRAFT, DDS • Income Statement and Statement of owners equity and Balance Sheet • For the Month Ended September 30, 2002

  4. CARL CRAFT, DDS • Income Statement • For the Month Ended September 30, 2002 • Revenues • Service revenue $24,000 • Expenses • Salaries expense $7,000 • Dental supplies expense 3,500 • Rent expense 2,000 • Utilities expense 700 • Total expenses 13,200 • Net income $10,800

  5. CARL CRAFT, DDS • Owner's Equity Statement • For the Month Ended September 30, 2002 • Carl Craft, Capital, September 1 $40,000 • Add: Net income 10,800 • 50,800 • Less: Drawings 5,000 • Carl Craft, Capital, September 30 $45,800

  6. CARL CRAFT, DDS • Balance Sheet • September 30, 2002 • Assets • Cash $ 6,000 • Accounts receivable 14,000 • Dental supplies 2,800 • Equipment 30,000 • Total assets $52,800 • Liabilities and Owner's Equity • Liabilities • Accounts payable $ 7,000 • Owner's Equity • Carl Craft, Capital 45,800 • Total liabilities and owner's equity $52,800

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