Computation of Assets, Liabilities, and Owners' Equity After a Series

question 11

Essay

Computation of assets, liabilities, and owners' equity after a series of transactions. The December 31, 2009 balance sheet of Charles Realty reported total assets of $900,000, total liabilities of $350,000, and owners' equity of $550,000. The following transactions occurred in January of 2010:
(1) The business purchased land for $250,000, paying $100,000 cash and issuing a note payable for the balance.
(2) The business collected accounts receivable totaling $45,000.
(3) The business sold land costing $50,000 for $60,000 cash.
(4) The business paid $50,000 of the note payable.
Compute the following at January 31, 2010:
(A.) Total assets $__________
(B.) Total liabilities $__________
(C.) Owners' equity $__________

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Definitions:

Sustainable Operating Earnings

The portion of a company's profit that is expected to continue in the future, excluding any one-time items or unusual income.

Big Bath Items

Large and often one-time charges taken by a company to write off or write down the value of assets, or to provide for expected future liabilities, sometimes used to manage earnings.

Restructuring

A process of reorganizing a company's structure, operations, or finances with the goal of increasing efficiency or to prepare the business for a sale, merger, or change in strategy.

GAAP

Generally Accepted Accounting Principles, a set of accounting standards and practices formally established to bring consistency to financial reporting.