Chapter 2 Sample Solutions for Review

# Chapter 2 Sample Solutions for Review - E2.3 Use the...

This preview shows pages 1–2. Sign up to view the full content.

E2.3. Use the accounting equation to solve for the missing information Firm A: A = L + PIC + ( Beg. RE + NI - DIV = End. RE) \$420,000 = \$215,000 + \$75,000 + ( \$78,000 + ? - \$50,000 = ? ) In this case, the ending balance of retained earnings must be determined first: \$420,000 = \$215,000 + \$75,000 + End. RE. Retained earnings, 12/31/10 = \$130,000 Once the ending balance of retained earnings is known, net income can be determined: \$78,000 + NI – \$50,000 = \$130,000 Net income for 2010 = \$102,000 Firm B: A = L + PIC + ( Beg. RE + NI - DIV = End. RE ) \$540,000 = \$145,000 + ? + ( ? + \$83,000 - \$19,000 = \$310,000 ) \$540,000 = \$145,000 + PIC + \$310,000 Paid-in capital, 12/31/10 = \$85,000 Beg. RE + \$83,000 - \$19,000 = \$310,000 Retained earnings, 1/1/10 = \$246,000 Firm C: A = L + PIC + ( Beg. RE + NI - DIV = End. RE ) \$325,000 = ? + \$40,000 + ( \$42,000 + \$113,000 - \$65,000 = ? ) In this case, the ending balance of retained earnings must be determined first: \$42,000 + \$113,000 - \$65,000 = End. RE Retained earnings, 12/31/10 = \$90,000 Once the ending balance of retained earnings is known, liabilities can be determined: \$325,000 = L + \$40,000 + \$90,000 Total liabilities, 12/31/10 = \$195,000 E2.5. Prepare the retained earnings portion of a statement of changes in owners' equity for the year ended December 31, 2010: Retained Earnings, December 31, 2009………………………………… \$ 311,800 Less: Net loss for the year ended December 31, 2010…………………..

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern