Question

PI-SA Financial statement information about four different companies is as follows.

Alexei	Ramirez	Dayan	Viciedo
Company	Company	Company	Company

January 1, 2012

     Assels                                          $ 95,000                           $110,000$170,000

Liabilities	50,000		75,000	(j)
Owner's equity December 31, 2012		60,000	45,000	90,000
Assels	(b)	141,000	200,000
Liabilities	55,000	75,000	(h)	80,000
Owner's equity Owner's equity changes in year	63,000		130,000	162,000
Additional investment		15,000	10,000	15,000
Drawings	25,000		14,000	20,000
Total revenues	350,000	420,000		520,000
Total expenses	320,000	385,000	342,000	(1)

Instructions

1. Determine the missing amounts. (Hint: For example, to solve for (a), Assets — Liabilities Owner's equity — $45,000.)
2. Prepare the owner's equity statement for Ramirez Company.
3. Write a memorandum explaining the sequence for preparingfinancial statements and Lhc interrelationship 01 the ownerS equity statement to the income statement and balance sheet.

Answer 1

(a)

Alexei Company	Ramirez Company	Dayan Company	Viciedo Company
(a)	$  45,000	(d)	$50,000	(g)	$120,000	(j)	$  80,000
(b)	118,000	(e)	66,000	(h)	70,000	(k)	242,000
(c)	13,000	(f)	44,000	(i)	431,000	(l)	443,000

(b)

                                                                   RAMIREZ COMPANY

                                                                 Owner’s Equity Statement

                                                      For the Year Ended December 31, 2012

                                                                                                                                                  

          Owner’s capital, January1...........................................................            $  60,000

          Add:   Investment........................................................... $15,000

                         Net income.......................................................   35,000               50,000

                                                                                                                             110,000

          Less:  Drawings...........................................................................                44,000

          Owner’s capital, December 31.....................................................            $  66,000

(c)      The sequence of preparing financial statements is income statement, owner’s equity statement, and balance sheet. The interrelationship of the owner’s equity statement to the other financial statements results from the fact that net income from the income statement is reported in the owner’s equity statement and ending capital reported in the owner’s equity statement is the amount reported for owner’s equity on the balance sheet.