The records of Mercier Company show the following at December 31, 201620:
Requirements
1. Compute the missing amount for MercierCompany. You will need to work through owner's equity.
2. Did Mercier earn a net income or suffer a net loss for the year? Compute the amount.
Requirement 1. Compute the missing amount for MercierCompany. You will need to work through owner's equity.
Begin by working through owner's equity. Rework the accounting equation and then solve for owner's equity ("equity") at the beginning and end of the period.
|
|
Assets
|
-
|
Liabilities
|
=
|
Equity
|
|
Beginning
|
73,000
|
-
|
37,000
|
=
|
36,000
|
|
Ending
|
83,000
|
-
|
32,000
|
=
|
|
Identify the formula to show the change in equity and then complete the calculation to solve for the missing expenses for the period.
Requirement 2. Did Mercier earn a net income or suffer a net loss for the year? Compute the amount. Identify the formula and then solve for Mercier's net income or loss for the period.
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Beginning:
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|
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Equity:
|
|
|
Assets
|
$73,000
|
|
Owner contributions
|
$4,000
|
|
Liabilities
|
37,000
|
|
Owner withdrawals
|
10,000
|
|
Ending:
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|
|
Revenues
|
245,000
|
|
Assets
|
$83,000
|
|
Expenses
|
?
|
|
Liabilities
|
32,000
|
|
|
|