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-   -   The accounting equation (https://www.askmehelpdesk.com/showthread.php?t=237469)

  • Jul 14, 2008, 05:30 PM
    stuckinmath
    The accounting equation
    I need to fill in the blanks for 4 cases.

    Total Assets, end of period $40,000
    Total Liabilities, end of period $??
    Capital Stock, end of period $10,000
    Retained Earnings, beginning of period $15,000
    Net Income for the period $8,000
    Dividens for the period $2,000


    Total Assets, end of period $??
    Total Liabilities, end of period $ 15,000
    Capital Stock, end of period $5,000
    Retained Earnings, beginning of period $8,000
    Net Income for the period $7,000
    Dividens for the period $1,000

    Total Assets, end of period $75,000
    Total Liabilities, end of period $ 25,000
    Capital Stock, end of period $20,000
    Retained Earnings, beginning of period $10,000
    Net Income for the period $??
    Dividens for the period $3,000


    Total Assets, end of period $50,000
    Total Liabilities, end of period $ 10,000
    Capital Stock, end of period $ 15,000
    Retained Earnings, beginning of period $20,000
    Net Income for the period $9,000
    Dividens for the period $??


    Thanks so much in advance for your help! I have been working on this for the last couple hours and am totally clueless. I do know that it related to the accounting equation.
  • Jul 14, 2008, 11:11 PM
    Criado
    Here's the equation you need to use.

    Total Assets = Total Liabilities + Capital Stock + (Retained Earnings+Net Income - Dividends)

    I'll give you a similar case:

    Total Assets, end of period $15,000
    Total Liabilities, end of period $?
    Capital Stock, end of period $ 5,000
    Retained Earnings, beginning of period $4,000
    Net Income for the period $3,000
    Dividens for the period $2,000

    Based on the equation:

    Total Assets = Total Liabilities + Capital Stock + (Retained Earnings+Net Income - Dividends)

    15,000 = X(unknown) + 5,000 + (4,000 + 3,000 - 2,000)
    15,000 = X + 5,000 + (5,000)
    15,000 = X + 10,000
    15,000 - 10,000 = X
    X = 5,000
    Total Liabilities, end of period $ 5,000

    Use the equation in the cases you gave and please tell us your answer.
  • Jul 15, 2008, 07:20 AM
    stuckinmath
    Case 1
    40,000= x + 10,000 + (15,000+8,000-2,000)
    40,000=x + 10,000+(21,000)
    40,000=x+31,000
    x=9,000

    Case 2
    x=15,000+5,000+(8,000+7,000-1,000)
    x=15,000+5,000+14,000
    x=34,000

    Case 3
    75,000=25,000+20,000+(10,000+ x -3,000)
    75,000=45,000+7,000+x
    75,000=52,000+x
    x=23,000

    Case 4
    50,000=10,000+15,000+(20,000+9,000-x)
    50,000=25,000+(29,000-x)
    50,000=54,000-x
    x=4,000


    Thanks so much for giving me the equation to solve this!! I struggled with this for so long. Did I apply the equation to my cases correctly?
  • Jul 15, 2008, 08:32 AM
    Criado
    Congratulations! :) They are all correct!
  • Jul 15, 2008, 08:49 AM
    stuckinmath
    Yay!! :D

    Thank you so much!!

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