The following financial statement information is known about the two unrelated companies. Answer the following...
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Accounting
The following financial statement information is known about the two unrelated companies. Answer the following questions using your knowledge of the financial statement and particularly the Balance Sheet equation:
Company A Company B
December 31, 2016:
Assets 90,000 105,000
Liabilities 38,000 45,000
December 31,2017
Assets 96,000 82,000
Liabilities ? 55,000
During 2017:
Owner Investments 10,000 19,000
Profit (loss) (16,000) ?
Owner withdrawals 5,000 6,000
Required: What was the Equity on December 31,2017 for Company A? Do not use dollar ($) sign, commas or decimal places in your answer.
A. Wages expense will be overstated and Net Income would be overstated
B. Wages expense will be understated and Net Income would be overstated
C. Owners equity would be understated
D. The balance sheet will not balance due to net income being overstated
A. Debit Insurance Expense $ 2,400; Credit Prepaid Insurance $2,400
B. Debit Prepaid Insurance $800; Credit Insurance Expense $800
C. Debit Insurance Expense $800; Credit Prepaid Insurance
D. Debit Prepaid Insurance $2,400; Credit Cash $2,400
The following financial statement information is known about the two unrelated companies. Answer the following questions using your knowledge of the financial statement and particularly the Balance Sheet equation:
Company A Company B
December 31, 2016:
Assets 90,000 105,000
Liabilities 38,000 45,000
December 31,2017
Assets 96,000 82,000
Liabilities ? 55,000
During 2017:
Owner Investments 10,000 19,000
Profit (loss) (16,000) ?
Owner withdrawals 5,000 6,000
Required: What was the Equity on December 31,2017 for Company A? Do not use dollar ($) sign, commas or decimal places in your answer.
Wages expense will be overstated and Net Income would be overstated
Wages expense will be understated and Net Income would be overstated
Owners equity would be understated
The balance sheet will not balance due to net income being overstated
Debit Insurance Expense $ 2,400; Credit Prepaid Insurance $2,400
Debit Prepaid Insurance $800; Credit Insurance Expense $800
Debit Insurance Expense $800; Credit Prepaid Insurance
Debit Prepaid Insurance $2,400; Credit Cash $2,400
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