Ex. 246
An analysis of the transactions made by K. T. Lang & Co., a law firm, for the month of July is shown below. Each increase and decrease in equity is explained.
Assets = Liab. + Equity
Retained Earnings
Accounts Accounts Share
Cash +Receivable + Supplies +Equipment = Payable +Cap. + Rev. - Exp. - Div.
1. +$15,000 +$15,000 Iss. Sh.
2. - 2,000+$5,000 +$3,000
3. - 750 +$750
4. + 2,500+$6,600 + $9,100 Serv. Rev.
5. - 1,500− 1,500
6. - 2,500 − $2,500 Div.
7. - 650 − $650 Rent Exp.
8. + 550 - 550
9. - 3,500 − 3,500 Sal. Exp.
10. + 500 − 500 Util. Exp.
Instructions
(a)
Determine how much equity increased for the month.
(b)
Compute the amount of net income for the month.
Ex. 247
The Lim Company had the following assets and liabilities on the dates indicated.
December 31
Total Assets
Total Liabilities
2012$530,000 $230,000
2013$480,000 $210,000
2014$590,000 $300,000
Lim began business on January 1, 2012, with an investment of $100,000.
Instructions
From an analysis of the change in equity during the year, compute the net income (or
loss) for:
(a)2012, assuming Lim paid dividends of $25,000 for the year.
(b)2013, assuming Lim made an additional investment of $60,000 and paid no dividends in 2013.
(c)2014, assuming Lim made an additional investment of $10,000 and paid dividends of $30,000 in 2014.