Analyzing Transactions: Effects of Missing Information
Answer each of the following independentquestions:
a. Dennis Company has assets of $125,000 and owners’ equity of $40,000. What are its liabilities? If these liabilities include an outstanding mortgage of $60,000, identify some of the other liabilities that Dennis Company might have.
b. Bruce Company has assets of $300,000 and liabilities of $110,000. Suppose that the original owners invested $200,000 in this business. What might account for the difference between the original investment and the current balance in owners’ equity?
c. Pieter Company has liabilities of $400,000 and owners’ equity of $155,000.
What are its assets? Suppose that Pieter has conducted an appraisal and has found that its assets are valued at $1,000,000. How can such a difference occur?
d. Elizabeth Company has assets of $500,000 and liabilities of $600,000. What conclusions can you draw about this firm?