Accounting Equation P2

Problem

1. For each of the following, determine the amount of net income or net loss for the year.

(a) Revenues for the year totaled P90,500 and expenses totaled P44,500. The owner made an
additional investment of P15,000 during the year.
(b) Revenues for the year totaled P75,500 and expenses totaled P110,500. The owner
withdrew P20,000 during the year.
(c) Revenues for the year totaled P198,000 and expenses totaled P85,000. The owner
invested an additional P20,000 and withdrew P15,000 during the year.
(d) Revenues for Smith Co. totaled P273,500 and expenses totaled P263,800. Cash
withdrawals of P30,000 were paid during the year.
2. The total assets and total liabilities of Missy's Draperies, a proprietorship, at the beginning and at the end of
the current fiscal year are as follows:

Jan. 1 Dec. 31
Total assets P250,000 P430,000
Total liabilities 200,000 140,000

(a) Determine the amount of net income earned during the year. The owner did not
invest any additional assets in the business during the year and made no withdrawals.
(b) Determine the amount of net income during the year. The assets and liabilities at the
beginning and at the end of the year are unchanged from the amounts presented above.
However, the owner withdrew P32,000 in cash during the year (no additional
investments).
(c) Determine the amount of net income earned during the year. The assets and liabilities
at the beginning and at the end of the year are unchanged from the amounts presented
above. However, the owner invested an additional P40,000 in cash in the business in
June of the current fiscal year (no withdrawals).
(d) Determine the amount of net income earned during the year. The assets and liabilities
at the beginning and at the end of the year are unchanged from the amounts presented
above. However, the owner invested an additional P10,000 in cash in August of the
current fiscal year and made twelve monthly cash withdrawals of P3,000 each during
the year.
3. On May 1, 2007, the amount of Mary Beth's capital in Beth’s Services Company was P101,000. During
May, she withdrew P15,100 from the business. The amounts of the various assets, liabilities, revenues, and
expenses are as follows:

Accounts payable P 8,900

Accounts receivable 25,950
Cash 11,390
Fees earned 70,800
Insurance expense 1,475
Land 74,400
Miscellaneous expense 1,510
Prepaid insurance 2,000
Rent expense 8,000
Salary expense 35,300
Supplies 950
Supplies expense 825
Utilities expense 3,800

Present, in good form, (a) an income statement for May, (b) a statement of owner's equity for May, and (c) a
balance sheet as of May 31.