The accounting records of Nettle Distribution show the following assets and liabilities as of December 31, 2014 and 2015. December 31 2014 2015
Cash $ 64,300 $ 15,640
Accounts receivable 26,240 19,390
Office supplies 3,160 1,960
Office equipment 44,000 44,000
Trucks 148,000 157,000
Building 0 80,000
Land 0 60,000
Accounts payable 3,500 33,500
Note payable 0 40,000
Late in December 2015, the business purchased a small office building and land for $140,000. It paid $100,000 cash toward the purchase and a $40,000 note payable was signed for the balance. Mr. Nettle had to invest $35,000 cash in the business to enable it to pay the $100,000 cash. Mr. Nettle withdraws $3,000 cash per month for personal use.
Required:
1. Prepare balance sheets for the business as of December 31, 2014 and 2015. (Hint: Report only total equity on the balance sheet and remember that total equity equals the difference between assets and liabilities.)
NETTLE DISTRIBUTION
Balance Sheet
December 31, 2014
Assets Liabilities
Cash $64,300
Accounts payable $3,500
Accounts receivable 26,240
Office equipment 44,000
Trucks 148,000
Equity
Total equity 282,200
Total assets $282,540
Total liabilities and equity $285,700
NETTLE DISTRIBUTION
Balance Sheet
December 31, 2015
Assets Liabilities
Cash $15,640
Accounts payable $33,500
Accounts receivable 19,390
Note payable 40,000
Office supplies 1,960
Office equipment 44,000
Trucks 157,000
Total liabilities 73,500
Building 80,000
Equity
Land 60,000
Total equity 304,490
Total assets $377,990
Total liabilities and equity $377,990
Please show how you calculate this so I can have a clear understanding of how to arrive at the answers.
Equity, December 31, 2014
Add: Owner's investment 35,000
Add: Net income 35,000
Less: Owner Withdrawals
Equity, December 31, 2015
$35,000