Ting Hsu Is the Owner of Hsu's Financial Services

question 142

Essay

Ting Hsu is the owner of Hsu's Financial Services. At the end of its accounting period, December 31, of Year 1, Hsu's has assets of $575,000 and owner's equity of $335,000. Using the accounting equation and considering each case independently, determine the following amounts:?
(a) Hsu's liabilities as of December 31 of Year 1.
(b) Hsu's liabilities as of December 31 of Year 2, assuming that assets increased by $56,000 andowner's equity decreased by $32,000.
(c) Net income or net loss during Year 2, assuming that as of December 31, Year 2, assets were $592,000,liabilities were $450,000, and there were no additional investments or withdrawals.

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Definitions:

Callable Bonds

Bonds that can be redeemed by the issuer before their maturity date at a specified call price, allowing issuers to refinance debt if interest rates decline.

Fair Market Price

The price that a willing buyer and a willing seller agree upon, assuming both parties have reasonable knowledge of the item's relevance and are under no pressure to buy or sell.

Loss On Redemption

The loss incurred when a debt obligation or security is redeemed before its maturity date at a value less than the original purchase price or par value.

Carrying Amount

The balance of the bonds payable account (face amount of the bonds) less any unamortized discount or plus any unamortized premium.