I enjoy a simple accounting cross-question?
Company A
Dec 31, 2007
Assets $47,000
Liabilities ?
During the year 2007
Stock issuances $6000
Net Income $10730
Cash Dividends $3500
(Question) What is the equity amount on December 31, 2007?
(What I don't understand) If assets = Liabilities + equity, and I just know the asset, how can I answer this request for information?
Help Please?
Answers:
Assets = Liabilities + Shareholders' equity
Shareholders' equity is not purely share wherewithal. It's share income plus retained income.
Assuming this is the 1st year of operation, your share means is $6,000 and your retained income is $7,230, so shareholders' equity is $13,230.
Since assets = $47,000, liability must be $33,770.
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It's a trick. You don't really call for to know how much is the liability.
We would assume that Company A have lately commenced business in 2007, so that the $6,000 stock issuance would be its just equity. Then add on $10,730 lattice income and subtract $3,500 bread dividend.
You would get hold of the equity for December 31, 2007 of $13,230.
Bonus:
Liabilities for January 31, 2007
$47,000-$6,000=$41,000
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Dec 31, 2007
Assets $47,000
Liabilities ?
During the year 2007
Stock issuances $6000
Net Income $10730
Cash Dividends $3500
(Question) What is the equity amount on December 31, 2007?
(What I don't understand) If assets = Liabilities + equity, and I just know the asset, how can I answer this request for information?
Help Please?
Answers:
Assets = Liabilities + Shareholders' equity
Shareholders' equity is not purely share wherewithal. It's share income plus retained income.
Assuming this is the 1st year of operation, your share means is $6,000 and your retained income is $7,230, so shareholders' equity is $13,230.
Since assets = $47,000, liability must be $33,770.
For instant answers to Accounting related question, visit
http://freeadvice.freehostia.com/educati...
It's a trick. You don't really call for to know how much is the liability.
We would assume that Company A have lately commenced business in 2007, so that the $6,000 stock issuance would be its just equity. Then add on $10,730 lattice income and subtract $3,500 bread dividend.
You would get hold of the equity for December 31, 2007 of $13,230.
Bonus:
Liabilities for January 31, 2007
$47,000-$6,000=$41,000