Todd Olson is the owner and operator of Alpha, a motivational consulting busines
ID: 2603957 • Letter: T
Question
Todd Olson is the owner and operator of Alpha, a motivational consulting business. At the end of its accounting period, December 31, 2013, Alpha has assets of $869,050 and liabilities of $274,620. Using the accounting equation and considering each case independently, determine the following amounts.
a. Todd Olson, capital, as of December 31, 2013. $ b. Todd Olson, capital, as of December 31, 2014, assuming that assets increased by $137,310 and liabilities increasedby $82,560 during 2014. $ c. Todd Olson, capital, as of December 31, 2014, assuming that assets decreased by $68,650 and liabilities increased
by $24,330 during 2014. $ d. Todd Olson, capital, as of December 31, 2014, assuming that assets increased by $114,710 and liabilities decreased
by $43,450 during 2014. $ e. Net income (or net loss) during 2014, assuming that as of December 31, 2014, assets were $1,095,000,
liabilities were $178,160, and there were no additional investments or withdrawals. $
Explanation / Answer
Solution:-
a:-
= Capital = Assets - Liabilities
= Capital = 869,050 - 274,620
= Capital = $ 594,430.
b:-
Closing captial = Opening capital +- Change in assets +- chang in liabilities
= 594,430 + 137,310 - 82,560
= $ 649,180.
c.
Closing captial = Opening capital +- Change in assets +- chang in liabilities
= 594,430 - 68,650 - 24,330
= $ 501,450.
d.
Closing captial = Opening capital +- Change in assets +- chang in liabilities
= 594,430 + 114,710 + 43,450
= $ 752,590.
e.
= 1,095,000 - 178,160 - 594,430
= $ 322,410 Net income
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