Question

Margaret Moore is the only owner of Carla Vista Park, a public camping ground near the Lake Mead National Recreation Area. Margaret has compiled the following financial information as of December 31, 2022.

Service revenues during 2022		$246,000		Fair value of equipment		$168,000
Accounts payable		13,200		Notes payable		72,000
Cash on hand		27,600		Expenses during 2022		180,000
Original cost of equipment		126,600		Accounts receivable		21,000

(a)

Determine Margaret Moore’s net income from Carla Vista Park for 2022.

(b)

Prepare a balance sheet for Carla Vista Park as of December 31, 2022.

Answer 1

a)Margaret Moore’s net income from Carla Vista Park for 2022 is calculated below:

	$
Service Revenue	246,000
Less: Expenses:
Expenses	180,000
Net Income	$ 66,000

b)A balance sheet for Carla Vista Park as of December 31, 2022 is as follows:

Liability And Shareholder's equity	$	Assets	$
Current Liability:		Current Assets:
Account Payable	13,200	Cash on hand	27,600
		Accounts receivable	21,000
Long Term Loan:
Notes payable	72,000	Property, plant and Equipment:
		Equipment (Cost )	126,600
Shareholder's Equity :
Owner's Capital ( Working Note 1)	24,000
Retained Earnings (Net Income )	66,000
Total Liability And Shareholder's equity	$175,200	Total Assets	$175,200

Working Note : 1

Owner's Capital = Total Assets - Long Term Loan - Current Liability - Retained Earnings (Net Income )

= $175,200 - $13,200 - $72,000 - $66,000

= $24,000