In: Accounting
Balance Sheet as on First day of the Month | |||
Assets | Amount | ||
Current Assets | |||
Cash | 200,000 | ||
Liabilities | Amount | ||
Capital | |||
Smith | 80,000 | ||
Jones | 70,000 | ||
Loan from Grandma | 12,000 | ||
Loan from Bank | 38,000 | ||
Profit | - | ||
200,000 |
Income Statement | ||
Sales | 120,000 | |
Less | Parts | 90,000 |
Less | workers comp | 10,000 |
Less | Rent | 3,000 |
Less | Interest on Grandma Loan | 180 |
Less | Interest on Bank Loan | 570 |
Profit | 16,250 |
Balance Sheet as on Last day of the Month | |||
Assets | Amount | ||
Current Assets | |||
Cash | 207,250 | ||
Liabilities | Amount | ||
Capital | |||
Smith | 80,000 | ||
Less | Drawings | 4,000 | 76,000 |
Jones | 70,000 | ||
Less | Drawings | 4,000 | 66,000 |
Loan from Grandma | 11,000 | ||
Loan from Bank | 38,000 | ||
Profit | 16,250 | ||
207,250 |
d. The percent of equity owned by Smith and Jones are 8:7. Grandma is just a lender and hence cannot own any equity
e. Equity owned on the last day of the month is 76000 & 66000 post salary to self and to this we need add the profit of 16,250 in the ratio of 8:7 which is 84,666 & 73,583 will be their net equity