O' Hara Company began operations on December 1, 2011. Presented below is selected information related to O' Hara Company at December 31, 2011.
Office Equipment ₤ 40,000; Utilities Expense ₤ 6,000; Cash 14,000; Accounts Receivable 27,000; Service Revenue 108,000; Wages Expense 47,000; Rent Expense 13,000; Notes Payable 10,000; Accounts Payable 16,000; Dividends 15,000; Share Capital 28,000;find At December 31, 2011, assets total, At December 31, 2011, liabilities total,Net income for the month of December is, Retained earnings at December 31, 2011 is,Equity at December 31, 2011, is.
To answer these questions, we need to categorize the given information into assets, liabilities, and equity accounts.
Assets:
- Office Equipment: £40,000
- Cash: £14,000
- Accounts Receivable: £27,000
Total Assets: £40,000 + £14,000 + £27,000 = £81,000
Liabilities:
- Notes Payable: £10,000
- Accounts Payable: £16,000
Total Liabilities: £10,000 + £16,000 = £26,000
Net income for the month of December:
To find the net income, we need to subtract the total expenses from the total revenue.
- Service Revenue: £108,000
- Utilities Expense: £6,000
- Wages Expense: £47,000
- Rent Expense: £13,000
Total Expenses: £6,000 + £47,000 + £13,000 = £66,000
Net Income: £108,000 - £66,000 = £42,000
Retained Earnings at December 31, 2011:
Since O'Hara Company began operations in December 2011, we assume there were no retained earnings at the start. Hence, the retained earnings at December 31, 2011, will be equal to the net income for the month.
Retained Earnings: £42,000
Equity at December 31, 2011:
Equity is the difference between assets and liabilities.
Equity = Assets - Liabilities
Equity = £81,000 - £26,000 = £55,000
Summary of the answers:
- At December 31, 2011, assets total: £81,000
- At December 31, 2011, liabilities total: £26,000
- Net income for the month of December: £42,000
- Retained earnings at December 31, 2011: £42,000
- Equity at December 31, 2011: £55,000