Jan Nab is the sole owner of Deer Park, a public camping ground near the Lake Mead National Recreation Area. Jan has compiled the following financial information as of December 31, 2010.
Revenues during 2010—camping fees $140,000 Market value of equipment $140,000
Revenues during 2010—general store 50,000 Notes payable 60,000
Accounts payable 11,000 Expenses during 2010 150,000
Cash on hand 23,000 Supplies on hand 2,500
Original cost of equipment 105,500
Instructions
(a) Determine Jan Nab's net income from Deer Park for 2010.
$
(b) Complete the balance sheet for Deer Park as of December 31, 2010. (List assets in order of liquidity and liabilities from largest to smallest eg 10, 5, 3, 2.)
Deer PARK
Balance Sheet
December 31, 2010For the year ended December 31, 2010
Assets
Accounts payableExpensesCamping revenuesStore revenuesJan Nab,CapitalCashSuppliesEquipmentNotes payable $
SuppliesAccounts payableJan Nab,CapitalCashCamping revenuesStore revenuesExpensesEquipmentNotes payable
Store revenuesEquipmentCashCamping revenuesSuppliesExpensesNotes payableAccounts payableJan Nab,Capital
Total assets $
Liabilities and Owner's Equity
Liabilities
ExpensesAccounts payableStore revenuesJan Nab,CapitalSuppliesNotes payableCamping revenuesCashEquipment $
SuppliesEquipmentNotes payableStore revenuesExpensesAccounts payableCashJan Nab,CapitalCamping revenues
Total Liabilities
Owner's equity
EquipmentExpensesCamping revenuesStore revenuesJan Nab,CapitalCashSuppliesNotes payableAccounts payable
Total liabilities and owner's equity $
(a) To determine Jan Nab's net income for 2010, subtract the expenses from the total revenues:
Total revenues = Camping fees + General store revenues = $140,000 + $50,000 = $190,000
Expenses = $150,000
Net income = Total revenues - Expenses = $190,000 - $150,000 = $40,000.
(b) Now, let's complete the balance sheet for Deer Park as of December 31, 2010.
Deer PARK
Balance Sheet
December 31, 2010
Assets
Cash $23,000
Supplies $2,500
Equipment (at original cost) $105,500
Total assets $131,000
Liabilities and Owner's Equity
Liabilities
Notes payable $60,000
Accounts payable $11,000
Total Liabilities $71,000
Owner's Equity
Jan Nab, Capital (Net income + Original equity) $40,000 + ($131,000 - $71,000) = $100,000
Total liabilities and owner's equity $171,000
(a) To determine Jan Nab's net income from Deer Park for 2010, we need to subtract the expenses from the total revenues.
Net Income = Total Revenues - Expenses
Net Income = (Camping fees + General store revenues) - Expenses
Net Income = ($140,000 + $50,000) - $150,000
Net Income = $190,000 - $150,000
Net Income = $40,000
Therefore, Jan Nab's net income from Deer Park for 2010 is $40,000.
(b) Completing the balance sheet for Deer Park as of December 31, 2010:
Deer Park
Balance Sheet
December 31, 2010
Assets:
Cash on hand $23,000
Supplies on hand $2,500
Equipment (Market value) $140,000
Total assets $165,500
Liabilities and Owner's Equity:
Liabilities:
Notes payable $60,000
Accounts payable $11,000
Total liabilities $71,000
Owner's Equity:
Jan Nab's capital (Owner's equity) $94,500
(Net Income: $40,000 + Original cost of equipment: $105,500 - Notes payable: $60,000)
Total liabilities and owner's equity $165,500
To determine Jan Nab's net income from Deer Park for 2010, we need to calculate the total revenues and subtract the expenses.
Total Revenues = Camping fees + General store revenues
Total Revenues = $140,000 + $50,000 = $190,000
Net Income = Total Revenues - Expenses
Net Income = $190,000 - $150,000 = $40,000
Therefore, Jan Nab's net income from Deer Park for 2010 is $40,000.
To complete the balance sheet for Deer Park as of December 31, 2010, we need to organize the assets and liabilities.
Assets are listed in order of liquidity, from most liquid (easily convertible to cash) to least liquid. Liabilities are listed from largest to smallest.
Assets:
- Cash on hand: $23,000
- Supplies on hand: $2,500
- Equipment (market value): $140,000
Total assets: $23,000 + $2,500 + $140,000 = $165,500
Liabilities and Owner's Equity:
- Notes payable: $60,000
- Accounts payable: $11,000
Total Liabilities: $60,000 + $11,000 = $71,000
Owner's Equity:
- Jan Nab, Capital (Net Income): $40,000
Total Liabilities and Owner's Equity: $71,000 + $40,000 = $111,000
Therefore, the completed balance sheet for Deer Park as of December 31, 2010, would look like this:
Deer Park
Balance Sheet
December 31, 2010
Assets:
Cash: $23,000
Supplies: $2,500
Equipment: $140,000
Total assets: $165,500
Liabilities and Owner's Equity:
Liabilities:
Notes payable: $60,000
Accounts payable: $11,000
Total Liabilities: $71,000
Owner's Equity:
Jan Nab, Capital: $40,000
Total Liabilities and Owner's Equity: $111,000