Question

The following general equation can be used to determine missing information about balance sheet accounts:


Use the equation to determine the missing information in each of the following independent situations. For each case assume that the year-end is December 31. You can also use an accounting equation spreadsheet to determine the missing information.
a. On December 31, 2017 Foxboro Ltd. (Foxboro) owed its employees $44,000. During
2017, Foxboro’s employees earned $400,000 and were paid $420,000. How much did
Foxboro owe its employees on December 31, 2016?
b. Canora Inc. (Canora) had $1,000,000 and $900,000 of accounts receivable and on January 1 and December 31, 2017 respectively. During 2017, Canora collected $4,900,000 from customers. What amount of credit sales did Canora make during 2017?
c. Sheth Inc. (Sheth) purchases all of its inventory on credit. On January 1, 2016, Sheth had $2,500,000 of inventory on hand and on December 31, 2016 it had $3,000,000 of inventory. Cost of goods sold during 2016 was $10,700,000. The balances in Sheth’s accounts payable account on January 1, 2016 and December 31, 2016 were $1,900,000 and $2,200,000 respectively. How much did Sheth pay its suppliers during 2016?
d. On January 1, 2016, Cleaveley Ltd. (Cleaveley) had $350,000 of inventory on hand.
During 2016, Cleaveley sold $1,040,000 of inventory and purchased $1,230,000 of inventory. How much inventory did Cleaveley have on December 31, 2016?
e. Dokis Inc. (Dokis) capitalizes certain development costs and amortizes them over five years. On January 1, 2016, the balance in Dokis’s development cost account on the balance sheet was $150,000 and on December 31, 2016 the balance was $170,000. During 2016, the amortization expense for development costs was $40,000. What amount of development costs did Dokis capitalize during 2016? Assume that Dokis doesn’t have a separate contra-asset account for accumulating amortization for thisaccount.


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  • CreatedFebruary 26, 2015
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