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
Jan Nab began business on January 1, 2010, with an investment of $20,000.
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
Assets
$
Total assets
$
Liabilities and Owner's Equity
Liabilities
$
Total Liabilities
Owner's equity
Total liabilities and owner's equity
$
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
Jan Nab began business on January 1, 2010, with an investment of $20,000
To determine Jan Nab's net income from Deer Park for 2010, we need to calculate the total revenues and subtract the total expenses.
Total Revenues = Camping fees + General store revenues = $140,000 + $50,000 = $190,000
Total Expenses = Expenses during 2010 = $150,000
Net Income = Total Revenues - Total Expenses = $190,000 - $150,000 = $40,000
Therefore, Jan Nab's net income from Deer Park for 2010 is $40,000.
Now, let's complete the balance sheet for Deer Park as of December 31, 2010.
Assets:
Cash on hand = $23,000
Supplies on hand = $2,500
Market value of equipment = $140,000
Total assets = Cash on hand + Supplies on hand + Market value of equipment = $23,000 + $2,500 + $140,000 = $165,500
Liabilities:
Notes payable = $60,000
Accounts payable = $11,000
Total liabilities = Notes payable + Accounts payable = $60,000 + $11,000 = $71,000
Owner's equity:
Original cost of equipment = $105,500
Initial investment = $20,000
Total owner's equity = Original cost of equipment + Initial investment = $105,500 + $20,000 = $125,500
Total liabilities and owner's equity = Total liabilities + Total owner's equity = $71,000 + $125,500 = $196,500
Therefore, the completed balance sheet for Deer Park as of December 31, 2010 is:
Deer PARK
Balance Sheet
Assets
Cash on hand: $23,000
Supplies on hand: $2,500
Market value of 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:
Original cost of equipment: $105,500
Initial investment: $20,000
Total owner's equity: $125,500
Total liabilities and owner's equity: $196,500