Requirement (a): Find out the missing amounts.

Alpha Beta Company Psi Company Omega

Company Company
January 1,2017
Assets 80,000 90,000 (g) 1,29,000 1,50,000
Liabilities 41,000 (d) 50,000 80,000 (j) 60,000
Owner’s equity (a) 39,000 40,000 49,000 90,000
December 31,2017
Assets (b) 1,10,000 1,12,000 1,70,000 (k) 2,51,000
Liabilities 60,000 72,000 (h)88,000 1,00,000
Owner’s equity 50,000 (e) 40,000 82,000 1,51,000
Owner’s equity changes in
year
Additional investment (c) 9,000 8,000 10,000 15,000
Drawings 15,000 (f) 33,000 12,000 10,000
Total revenues 3,50,000 4,10,000 (i) 3,85,000 5,00,000
Total expenses 3,33,000 3,85,000 3,50,000 (l) 4,44,000
Note 1: To solve these missing amounts, we used some formulas. Formulas are-

(1) Assets= Liabilities + Owner’s equity

(2) AI= Ending owner’s equity- Opening owner’s equity- Revenues +Expenses+ Drawings.

Note 2: Formula 2 changes on situation and missing requirements.

Requirement (b): The owner’s equity statement of Alpha Company.

We know, net income= Revenues- Expenses.

Alpha Company's net income= (3,50,000-3,33,000) = 17,000.

Alpha Company
Owner’s equity statement
For the year ended December 31,2017
Account Title Amounts($) Amounts($)
Owner’s capital, January 1,2017 39,000
Add:
Additional investment 9,000
Net income 17,000
Total 26,000
Total 65,000
Less: Drawings 15,000
Owner’s capital, December 31,2017 50,000
Requirement (c): Memorandum.

Date: 12, February 2024.

To: Prof. Dr. Ali Noor
From: Sumaya Nimat Khan

Subject: Sequence for preparing financial statements and interrelationship of statements.

This memorandum explains the sequence for preparing financial statements and interrelationship of
the owner’s equity statement to the income statement and balance sheet.

Sequence for preparing financial statements

1. Income statement: The income statement shows the company’s revenues and expenses for a
period, such as month, quarter or a year. The net income or loss is calculated by subtracting
the expenses from revenues.
2. Interrelationship statement: The three financial statements are interrelated. The net income
or loss from the income statement is added to the owner’s equity at the begging of the period
to arrive at the owner’s equity at the end of the period. Then year-end equity will report on
balance sheet.

The assets, liabilities and owner’s equity on the balance sheet must be balanced. That means, total
assets must be equal with total liabilities and owner’s equity.
Department of Business Administration

Assignment

Course title: Financial Accounting

Course code: ACN 501

Submitted to: Prof. Dr. Ali Noor

Pro-Vice Chancellor

Submitted by: Sumaya Nimat Khan

Registration no:23206031
Program: Master of Business Administration

Date: 12th February 2014