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
$
4898482
To determine Jan Nab's net income from Deer Park for 2010, we need to calculate the difference between the revenues and expenses.
(a) Net income = Revenues - Expenses
Revenues during 2010:
- Camping fees: $140,000
- General store: $50,000
Total Revenues = $140,000 + $50,000 = $190,000
Expenses during 2010: $150,000
Net Income = $190,000 - $150,000 = $40,000
Therefore, Jan Nab's net income from Deer Park for 2010 is $40,000.
(b) Now let's complete the balance sheet for Deer Park as of December 31, 2010.
Assets:
1. Cash on hand: $23,000
2. Supplies on hand: $2,500
3. Market value of equipment: $140,000
4. Total assets: $23,000 + $2,500 + $140,000 = $165,500
Liabilities:
1. Notes payable: $60,000
2. Accounts payable: $11,000
3. Total liabilities: $60,000 + $11,000 = $71,000
Owner's equity:
Jan Nab's investment at the beginning of the year: $20,000
Net income for 2010: $40,000
Total liabilities and owner's equity: $71,000 + $20,000 + $40,000 = $131,000
Deer Park
Balance Sheet
Assets $
1. Cash on hand $23,000
2. Supplies on hand $2,500
3. Market value of equipment $140,000
Total assets $165,500
Liabilities $
1. Notes payable $60,000
2. Accounts payable $11,000
Total liabilities $71,000
Owner's equity $
Jan Nab's investment $20,000
Net income for 2010 $40,000
Total liabilities and owner's equity $131,000