Maeve Irwin Is the CEO of Maeve's Spa

question 124

Essay

Maeve Irwin is the CEO of Maeve's Spa. At the end of its accounting period, December 31, 2013, Maeve's Spa has assets of £450,000 and liabilities of £125,000. Using the equation that holds for equality of assets to liabilties and shareholders' equity, determine the following amounts:
a)Shareholders’ Equity as of December 31, 2013.

b)Shareholders’ Equity as of December 31, 2014, assuming that assets increased by £65,000 and liabilities increased by £35,000 during 2014£.

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Definitions:

Equivalent Unit Cost

The costing method used in process costing that calculates the cost per unit taking into consideration the stage of completion of goods in process.

Process Costing

An accounting method used where production is continuous, and costs are assigned to units of product based on the processes they undergo.

Weighted-Average Method

A costing method used in process costing that averages the costs for units in production, combining costs from the current and previous periods.

Conversion Costs

The sum of direct labor and manufacturing overhead costs, representing the costs necessary to convert raw materials into finished goods.