Question

# Todd Olson is the owner and operator of Alpha, a motivational consulting business. At the end...

Todd Olson is the owner and operator of Alpha, a motivational consulting business. At the end of its accounting period, December 31, 2013, Alpha has assets of \$869,050 and liabilities of \$274,620. Using the accounting equation and considering each case independently, determine the following amounts.

 a. Todd Olson, capital, as of December 31, 2013. \$ b. Todd Olson, capital, as of December 31, 2014, assuming that assets increased by \$137,310 and liabilities increased by \$82,560 during 2014. \$ c. Todd Olson, capital, as of December 31, 2014, assuming that assets decreased by \$68,650 and liabilities increased by \$24,330 during 2014. \$ d. Todd Olson, capital, as of December 31, 2014, assuming that assets increased by \$114,710 and liabilities decreased by \$43,450 during 2014. \$ e. Net income (or net loss) during 2014, assuming that as of December 31, 2014, assets were \$1,095,000, liabilities were \$178,160, and there were no additional investments or withdrawals. \$

Solution:-

a:-

= Capital = Assets - Liabilities

= Capital = 869,050 - 274,620

= Capital = \$ 594,430.

b:-

Closing captial = Opening capital +- Change in assets +- chang in liabilities

= 594,430 + 137,310 - 82,560

= \$ 649,180.

c.

Closing captial = Opening capital +- Change in assets +- chang in liabilities

= 594,430 - 68,650 - 24,330

= \$ 501,450.

d.

Closing captial = Opening capital +- Change in assets +- chang in liabilities

= 594,430 + 114,710 + 43,450

= \$ 752,590.

e.

= 1,095,000 - 178,160 - 594,430

= \$ 322,410 Net income

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