Question
In: Accounting
Wizco Advertising's balance sheet data at May 31, 2018, and June 30, 2018, follow:
Wizco Advertising's balance sheet data at May 31, 2018, and June 30, 2018, follow:
| May 31, 2018 | June 30, 2018 | |
|---|---|---|
| Total Assets | $122,000 | $287,000 |
| Total Liabilities | 66,000 | 144,000 |
For each of the following situations that occurred in June 2018 with regard to the owner's contributions and withdrawals, compute the amount of net income or net loss during June 2018.
a. The owner contributed $10,000 to the business and made no withdrawals.
b. The owner made no contributions. The owner withdrew cash of $3,000.
c. owner made contributions of $12,500 and withdrew cash of $30,000
5. As the manager of a Papa Sean's restaurant, you must deal with a variety of business transactions. Give an example of a transaction that has each of the following effects on the accounting equation:
a. Increase one asset and decrease another asset.
b. Decrease an asset and decrease equity.
c. Decrease an asset and decrease a liability.
d. Increase an asset and increase equity.
e. Increase an asset and increase a liability.
Solutions
Expert Solution
Solutions :
| Assets = | Equity +Liabilities | |||||||||||||
| where Asset = | 287500 | |||||||||||||
| Liabilities | = | 144000 | ||||||||||||
| 287500 | = | equity +140000 | ||||||||||||
| Equity | = | 147500 | ||||||||||||
| The Equity is woth 147500 | ||||||||||||||
| Closing equity balance | =opening Eq balance+owner contribution-owners withdrawal+ net income/loss | |||||||||||||
| 147500 |
|
|||||||||||||
| Net Income | 13500 | |||||||||||||
Case 3
| The Equity is woth 147500 | ||||||||||
| Closing eq balance | = | opening Eq balance+owner contribution-owners withdrawal+ net income/loss | ||||||||
| 147500 | = | 122000+12500 | -30000 | net incom3/loss | ||||||
| Net Income /loss | 43000 | |||||||||
Case 2..
| The Equity is woth 147500 | ||||||||||
| Closing eq balance | = | opening Eq balance+owner contribution-owners withdrawal+ net income/loss | ||||||||
| 147500 | = | 122000-3000 | + | net incom3/loss | ||||||
| Net Income /loss | 28500 | |||||||||
Part b
A)Increase in one asset, decrease in another
asset.- Purchase of Furniture in cash ie.
increase in asset and decrease in cash
b)Decrease in asset, decrease in Equity - drawings
(withdrawn by Propreitor) ie, decrease in capital and decrease in
cash
c)Decrease in asset, decrease in liability
-Payment to creditors ie, decrease in cash and decrease in
creditors
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