EX 1-20 Missing amounts from balance sheet and income statement data

One item is omitted in each of the following summaries of balance sheet and income statement data for the following four different corporations:

Freeman heyward Jones Ramirez Beginning of the year: Assets$   900,000 $490,000 $115,000 (d) Liabilities360,000 260,000 81,000 $120,000 End of the year: Assets1,260,000 675,000 100,000 270,000 Liabilities330,000 220,000 80,000 136,000 During the year: Additional common stock issued (a) 150,000 10,000 55,000 Dividends 75,000 32,000 (c) 39,000 Revenue570,000 (b) 115,000 115,000 Expenses240,000 128,000 122,500 128,000

Determine the missing amounts, identifying them by letter. (Hint: First determine the amount of increase or decrease in stockholders’ equity during the year.)

Answer:

In each case, solve for a single unknown, using the following equation: 

Stockholders’ Equity (beginning) + Additional Common Stock Issued – Dividends + 

Revenues – Expenses = Stockholders’ Equity (ending) 

Freeman 

Stockholders’ equity at end of year ($1,260,000 – $330,000)……… $930,000 

Stockholders’ equity at beginning of year ($900,000 – $360,000)…   540,000 

Increasein stockholders’ equity………………………………………… $390,000 

Deduct increase due to net income ($570,000 – $240,000)…………   330,000 

$ 60,000 

Add     dividends………………………………………………….……………     75,000 

Additional common stockissued…………………………………… (a) $135,000 

Heyward 

Stockholders’ equity at end of year ($675,000 – $220,000)………… $455,000 

Stockholders’ equity at beginning of year ($490,000 – $260,000)…   230,000 

Increasein stockholders’ equity………………………………………… $225,000 

Add     dividends………………………………………………….……………     32,000 

$257,000 

Deduct additional common stock issued………………………………   150,000 

Increase due to net income……………………………………………… $107,000 

Add     expenses………………………………………………….……………   128,000 

Revenue………………………………………………….……………… (b) $235,000 

Jones 

Stockholders’ equity at end of year ($100,000 – $80,000)…………… $ 20,000 

Stockholders’ equity at beginning of year ($115,000 – $81,000)……    34,000 

Decreasein stockholders’ equity……………………………………… $(14,000) 

Decrease in stockholders’ equity due to net loss 

($115,000 – $122,500)…………………………………………………. 

  7,500 

$ (6,500) 

Deduct common stockissued……………………………………………   (10,000) 

Dividends………………………………………………………………… (c) $(16,500) 

Ramirez 

Stockholders’ equity at end of year ($270,000 – $136,000)………… $134,000 

Add decrease due to net loss ($115,000 – $128,000)…………………     13,000 

$147,000 

Add     dividends………………………………………………….……………     39,000 

Stockholders’ equity at beginning of year…………………………… $186,000 

Deduct additionalinvestment……………………………………………     55,000 

$131,000 

Add liabilities at beginning of year………………………………………   120,000 

Assets at beginning of year…………………………………………… (d) $251,000