Question

The following information relates to Mike’s lawn care business for 2011, its first year of operation:
Issued stock for $75,000.
On Jan 1, 2011, borrowed $100,000 from a bank. The interest rate is 10% annually, and principal and interest are due Jan 1, 2012.
During December, collected $7,399 in cash for service to be performed in Jan 2012.
Provided a total of $109,710 worth of goods and services during 2011.
Collected a total of $32,416 in cash for those goods and services given in 2011.
Paid for and used up $63,912 of supplies during 2011.
Based on the above information, what are the ending balances for Assets, Liabilities, and Equity for Mike’s company for 2011?
Assets = 228,197, Liabilities = 117,399, Equity = 110,798
Assets = 260,613, Liabilities = 117,399, Equity = 143,214
Assets = 220,798, Liabilities = 110,000, Equity = 110,798Assets = 228,197, Liabilities = 107,399, Equity = 120,798

Answer 1

Answer:

Assets = 228,197, Liabilities = 117,399, Equity = 110,798

Explanation:

Mike Lawn Care

Income Statement

Revenue Earned                   $109,710

Less Expenses

Supplies              $63,912

Interest Expense  10,000       (73912)

Net Income                           35798

First we calculate the net income and find the retained earnings.

Statement OF Retained Earnings

Retained Earnings at the Beginning Of the Year $75,000

Add Net Income                                                       35798

 Retained Earnings at the End Of the Year         $ 110798  

Now find the cash balance

Cash Calculations

Opening Cash  $ 75,000

Add Bank Loan 100,000

Add Cash Receipts  32416

Add Unearned Revenue 7399

Less Supplies Expenses 63912

Total  Cash  2017416

Balance Sheet

Assets

Cash      207416 (75,000 + 100,000 + $32,416-$63,912+ $7,399 )

Accounts Receivable 77294 ($109,710-$32,416 )

Total Assets 228,197

Liabilities

Bank Loan   100,000

Interest Payable 10,000

Unearned Revenue $7,399

Total Liabilities  117,399,

Retained Earnings  110798