7111AFE_Solution_Topic01 - 7111AFE Tutorial Solution Topic...

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7111AFE Tutorial Solution Topic 1 (10-20 min.) E 1-7 We find the solution by preparing the statement of changes in equity, plugging in the known amounts, and determining the net profit or net loss (X). For assumption 1: $41,000 + $10,000 +X = $64,000 X = $64,000 - $41,000 - $10,000 X = $13,000 Avis Rentals Statement of Changes in Equity Month Ended 30 June 20X6 1 2 3 Capital, 31 May, 20X6 ($150,000 – $109,000) $41,000 $41,000 $41,000 Add: Investments by owner 10,000 -0- 30,000 Net profit for the month 13,000 28,000 64,000 69,000 71,000 Less: Drawings by owner (-0-) (5,000) (6,000) Net loss for the month (1,000 ) Capital, 30 June 20X6 ($195,000 – $131,000) $64,000 $64,000 $64,000 2: $41,000 + 0 + X - $5,000 = $64,000; X = $28,000 3: $41,000 + $30,000 + X - $6,000 = $64,000; X = -$1,000
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(10-20 min.) E 1-9 Analysis of Transactions ASSETS = LIABILITIES + OWNER’S EQUITY DATE CASH AT BANK + MEDICAL SUPPLIES + LAND = ACCOUNTS PAYABLE + K. LUI, CAPITAL TYPE OF OWNERS’ EQUITY TRANSACTION July 6 60,000 60,000 Owner investment Bal. 60,000 60,000 9 (55,000 ) 55,000 Bal. 5,000 55,000 60,000 12 2,000 2,000 Bal. 5,000 2,000 55,000 2,000 60,000 15 Not a transaction of the business 15-31 7,000 7,000 Service revenue Bal. 12,000 2,000 55,000 2,000 67,000 15-31 (1,400) (1,400) Salary expense (1,000) (1,000) Rent expense (300 ) (300 ) Electricity and gas expense Bal. 9,300 2,000 55,000 2,000 64,300 28 500 (500 ) Bal. 9,800 1,500 55,000 2,000 64,300 31 (1,500 ) (1,500 ) Bal. 8,300 1,500 55,000 500 64,300 64,800 64,800
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