exam 1 review handout\n1. the basic accounting equation\nuse the basic accounting equation to complete the…

exam 1 review handout\n1. the basic accounting equation\nuse the basic accounting equation to complete the table below for each of the following independent scenarios:\n1. gretchen inc. has the following: liabilities of $32,500, retained earnings of $84,300, and common stock of $63,200. find the value of their assets.\n2. douville co. has assets totaling $348,800 and its stockholders’ equity equals half of its total assets. what is the value of their liabilities?\n3. tj & sons llc recorded unearned revenue of $76,000, notes payable of $2,300, prepaid rent of $41,000, and inventory of $98,000. what is the value of their stockholder’s equity?\n4. b & k corp. owns equipment worth $27,700 and has $2,900 in accounts payable. find the value of their stockholder’s equity.\n\n| assets | liabilities | stockholders’ equity |\n| ---- | ---- | ---- |\n| 1 | | |\n| 2 | | |\n| 3 | | |\n| 4 | | |

exam 1 review handout\n1. the basic accounting equation\nuse the basic accounting equation to complete the table below for each of the following independent scenarios:\n1. gretchen inc. has the following: liabilities of $32,500, retained earnings of $84,300, and common stock of $63,200. find the value of their assets.\n2. douville co. has assets totaling $348,800 and its stockholders’ equity equals half of its total assets. what is the value of their liabilities?\n3. tj & sons llc recorded unearned revenue of $76,000, notes payable of $2,300, prepaid rent of $41,000, and inventory of $98,000. what is the value of their stockholder’s equity?\n4. b & k corp. owns equipment worth $27,700 and has $2,900 in accounts payable. find the value of their stockholder’s equity.\n\n| assets | liabilities | stockholders’ equity |\n| ---- | ---- | ---- |\n| 1 | | |\n| 2 | | |\n| 3 | | |\n| 4 | | |

Answer

Explanation:

Step1: Recall basic accounting equation

The basic accounting equation is $Assets = Liabilities+Stockholders' Equity$.

Step2: Solve for Gretchen Inc.

Stockholders' Equity = Retained Earnings + Common Stock = $84300 + 63200=147500$. Using the accounting equation, $Assets=Liabilities + Stockholders' Equity$. So, $Assets = 32500+147500 = 180000$.

Step3: Solve for Douville Co.

Stockholders' Equity=$\frac{1}{2}\times$Assets. Given Assets = 348800, Stockholders' Equity = 174400. Using the accounting equation $Assets = Liabilities+Stockholders' Equity$, we can find Liabilities: $Liabilities=Assets - Stockholders' Equity=348800 - 174400=174400$.

Step4: Identify assets and liabilities for TJ & Sons LLC

Unearned revenue and notes payable are liabilities ($76000 + 2300=78300$). Prepaid rent and inventory are assets ($41000 + 98000 = 139000$). Since $Assets = Liabilities+Stockholders' Equity$, $Stockholders' Equity=Assets - Liabilities$. But we don't have enough information about total assets and are missing information about other components of stock - holders' equity, so we cannot solve this one with the given data.

Step5: Solve for B & K Corp.

Equipment is an asset ($27700$) and accounts payable is a liability ($2900$). Using the accounting equation $Assets = Liabilities+Stockholders' Equity$, we find $Stockholders' Equity=Assets - Liabilities=27700 - 2900 = 24800$.

Answer:

Assets Liabilities Stockholders' Equity
180000 32500 147500
348800 174400 174400
N/A 78300 N/A
27700 2900 24800