# Financial Accounting: Basic Background TOPIC C posted Thursday Lets practice the Accounting Equation: A L OE 1.At the beginning of

Financial Accounting: Basic Background
TOPIC C – posted Thursday Lets practice the Accounting Equation: A = L +OE
1.

At the beginning of 2019, ABC Co.s assets were \$410,000 and its owners equity was \$170,000.
During the year, assets increased by \$40,000 and liabilities decreased by \$15,000.
What is the owners equity at the end of 2019?
2.

Jake began the year with \$500,000 in assets and \$300,000 in liabilities. Net Income for the year was \$150,000 and dividends declared by the board of directors was \$25,000. Assuming no change in Liabilities, what were total assets at yearend?
3.

Doughnuts Coffee Shop has current assets of \$280 million; property, plant, and equipment of \$430 million; and other assets totaling \$170 million. Current liabilities are \$170 million and long-term liabilities total \$300 million. Use these data to write Doughnuts’ accounting equation.
4.

Diamond, Inc. began the year with total liabilities of \$95,000 and total stockholders’ equity of \$35,000. During the year, total assets increased by 5
%. How much are total assets at the end of the year?
5.

North West Airlines Ltd. began the year with total assets of \$100,000 and total liabilities of \$52,000. Net income for the year was \$27,000, and dividends were zero. How much is stockholders’ equity at the end of the year
6.

Hobo Doughnuts has current assets of \$270 million; property, plant, and equipment of \$400 million; and other assets totaling \$160 million.
Current liabilities are \$160 million and long-term liabilities total \$340 million.
a) Use this data to write Hobo accounting equation.
b) How much in resources does Hobo have to work with?
c) How much does Hobo owe creditors?
d) How much of the company’s assets do the Hobo stockholders actually own?
7. Prepare the balance sheet of Mary Burke Banking Company at August 31, 2019Total revenue31.4Investment assets.169.3Receivables
0.9Property and equipment1.6Current liabilities155.4Other expenses6.6Common stock14.2Retained earnings, beginning9.3Interest expense
0.1Retained earnings, ending
?
Salary expenses17.4Cash
2.8Long-term liabilities
2.6Other assets14.2

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