Weygandt Accounting Principles, 12e
Chapter One
Solutions to Challenge Exercises
Challenge Exercise 1-1 – Solution
1. a. January 1 owner’s equity = $76,000 – $26,000 = $50,000.
December 31 owner’s equity = $112,000 – $28,800 = $83,200.
The change in owner’s equity = $83,200 – $50,000 = $33,200.
$33,200 = Net income + investment by owner – drawings.
Expenses = $66,000.
2. a. January 1 owner’s equity = $76,000 – $26,000 = $50,000.
December 31 owner’s equity = $112,000 – $28,800 = $83,200.
The change in owner’s equity = $83,200 – $50,000 = $33,200.
3. January 1 owner’s equity = $76,000 – $26,000 = $50,000.
December 31 owner’s equity = $112,000 – $28,800 = $83,200.
4. January 1 owner’s equity = $76,000 – $26,000 = $50,000.
December 31 owner’s equity = $112,000 – $28,800 = $83,200.
The change in owner’s equity = $83,200 – $50,000 = $33,200.
Challenge Exercise 1-2 – Solution
Seattle Service
Income Statement
For the Year Ended December 31, 2017
Revenues
Service revenue $40,000
Expenses
Salaries and wages expense $16,000
Rent expense 3,500
Seattle Service
Owner’s Equity Statement
For the Year Ended December 31, 2017
Owner’s capital, 1/1/17 $ 21,000
Add: net income 17,000
Seattle Service
Balance Sheet
December 31, 2017
Assets
Cash $11,000
Accounts receivable 20,000
Liabilities
Notes payable $15,000
Accounts payable 20,000
Total liabilities $35,000
Owner’s Equity