 Hello. In this presentation, we will work some short calculation problems, short calculation problems that could be presented in the format of a test with the format of multiple choice questions or short answer questions, but either format that they will be in, there will be some small calculations involved within them. First question. Use the following information for for determining the amount of equity to report. Cash 61,000 building 120,500 land 201,500 and liabilities of 126,500. We will start off with the accounting equation of assets equaling liabilities plus the equity. We'll put the numbers in there. We could list them out in this format cash is going to be the 61,000 for the assets section building is going to be 125 for the assets section and land also an asset at 215 the liabilities they just list out as liabilities. So we can just say that's going to be in the liability portion over here at 126,500. And then if we were just to add those up, then we're going to add these up. I'm using the sum function to do so just adding the 61,000 the 120,005 the 215 will give us the 383,000 plus the liabilities of the 126,500 plus the equity. And this should be actually equals. So here is our formula. And we're just going to be solving for equity. Of course, we're going to do so by subtracting the 126,500 from each side. So I'm just going to write that down here. Little much, little much. And 126,500. And then we'll just subtract that out from each side. This 383,000 minus the 126,500 I'm doing a sum function here, which means we're taking this positive number minus that negative number subtraction problem providing us with 256,500 that then will be equal to we'll do the math here. We're taking the 126,500 minus the 126,500, which of course is zero plus and equity. Therefore, we see that the equity will then equal the 256,500. That's going to be the answer for this question. This one's pretty straightforward. They could ask they're just asking for exactly what the equity is. Just be careful when you're looking at multiple choice questions that they will be put in any combination of the calculation, you know, to come up to calculations that look correct that the numbers will will come to. So if you were to add that, you know, the two numbers involved here, that would probably be present within a multiple choice selection calculation. Next problem, determine the net income of a company for which the following information is available for the month of July. Employee salaries expense of 189,000 interest expense of 19,000 rent expense 29,000 and consulting revenue of 436,000. For this problem, we will need to know what the net income calculation is and then just know how to format our worksheet so that we can do this as quickly as possible. If it were in a multiple choice format, net income of course calculated as revenue minus expenses. So we can put this together as a small income statement. I'm going to call it revenue first. It's useful just to know how to format these things. So I'm going to format it similar to an income statement in that we have two columns. I'm not going to use debits and credits here, but a plus and minus format. I'm going to put the revenue in the outer column. I don't need to sum anything up for revenue. Therefore, we'll just place that in the outer column. And then we're going to say expenses. I'm just going to abbreviate for a colon and note we're going to have all the expenses. So I'm going to have employee salaries, interest expense, and rent expense. And go ahead and indent those. Notice I'm going to indent those here. And just for the formatting, obviously you're going to do this pretty quickly if it's a test question. But just note, if you put them in this format, then once we have our categories, I'm just going to pull these into the inside so that we're going to bring down the employee salaries. We're going to say that the interest expense was the 19 and the rent revenue was the 29,000. And then we're just going to sum those up. I'm going to say total expenses and sum those up in the outer column. So we're just adding up the 189,000 and 19,000 and the 29,000 providing us with the 237,000. Then we can say what net income is. And that's going to be, of course, the revenue. So I'm just taking the 436,000 minus the 237,000 providing us with net income of 199,000. So just to recap, when you're doing this with paper and pencil, if you're working a test question, I'll make this a bit smaller, then you're just looking to put this information as quick a format as possible and revenue minus expenses. Obviously, with this little of information, you could just take revenue here minus this, minus this, minus this. If you get to a bit more extended problems, you might want to just format it exactly as you would have it on an income statement because that isn't an easy format to look at a format that it's less likely to make mistakes on. And therefore, you can put the revenue in the outer column, add up the expenses in the inner column, and then give us the total expenses and then subtract out revenue minus expenses, giving us that net income. Next question. Company has beginning equity of 279,000 net income of 62,000 withdrawals of 51,000 and investments by owner of 17,000. It's ending equity is. We'll then include basically our owner's equity calculation when calculating this problem. That's going to be the beginning equity plus net income is going to increase the equity plus any with any contributions from the owner are going to increase any investments from the owner are going to increase the equity minus draws or withdrawals are going to decrease equity, and that's going to be giving us our ending calculations. You might want to write down that formula, keep that formula in mind. That's basically our owner equity formula. You see a similar calculation when we close out the the temporary accounts in the closing process. So I'll just say beginning equity. And we're going to say this is 279,000. If you're talking about a corporation, we might be talking about retained earnings. And then we're going to say net income, we can abbreviate net income, we're going to say that's going to increase. So I'm going to put 62,000 of net income. Then I'm going to say draws, I'm just going to abbreviate draws. And that is going to be subtracting. So I'm going to put it in our calculation as a negative of 51,000. And then we have investments, that's what the owner is putting into the company. And that's going to represent an increase in equity, although it doesn't increase net income, because it increases what is owed back to the owner. So we're going to put investments. And that's going to be 17,000. So we've got beginning equity, plus net income, minus draws, plus investments should give us ending equity. And we'll go ahead and do the math here. So we've got 279,000 beginning plus net income minus draws, because it's a negative number, plus the 17,000. That'll give us the ending equity in this case of 307,000. So this calculation, you might want to memorize it, you might want to work with the equity statement for a while. You might want to work with what net income is and how it relates to the balance sheet, just to get a feel for a better understanding of what we're doing here, rather than just memorize the calculation. But at the minimum, you need to memorize the calculation and then spend some time with it to kind of understand what the calculation is doing, because we're really tying together in this case, the income statement with net income to the beginning equity, which is kind of on the trial balance, you got to understand where that's going to come from in the process. And then we got the draws. And that's also an account that typically is a little bit more difficult to understand, doesn't happen that often, we don't have draws every day. Therefore, it's one of those journal entries. And one of those accounts that we also often get mixed up, especially because it's a contra equity account. Investments also something doesn't happen every day, that's fairly rare of a transactions. And therefore, the investments also go into retained earnings or to the capital account, which is an account that's not generally used for normal transactions, but is normally used to close out net income into. And therefore, this whole process here can be involving accounts that are a bit difficult and is worth spending some time, one, learning the calculation and then to try to understand what the calculation means in terms of the relationship of the financial statements and these individual accounts that aren't used quite as much, but will be involved when dealing with the equity calculation. Next question. Company reported total equity of $155,000 at the beginning of the year. The company reported $220,000 in revenues and $170,000 in expenses for the year. Liabilities at the end of the year of the year totaled $97,000. What are the total assets of the company at the end of the year? This problem's kind of combining two different components here, where we first have to calculate equity and then use equity to compute our accounting equation in order to find the total assets. So let's first think about our equity calculation, which typically beginning equity plus net income. Net income calculated as revenue minus expenses plus investments minus draws would give us the ending balance in equity. So we're going to say that the company reported equity at the beginning. So I'm just going to call this as the beginning equity and that's going to be $155,000. Note that some textbooks, if they're dealing with a sole proprietor, might call it the beginning capital. If you're dealing with a corporation beginning retained earnings, but the same type of calculation will be involved, it might just be called equity for any type of organization because equity as a total would be the same for any type of company, whether it be sole proprietor, partnership or the corporation. So then we're going to say during the year we had revenues of $220. Now we note that when we look at the calculation in terms of the equity section, in terms of the statement of equity or the statement of retained earnings, we typically increase equity by net income. But if a problem breaks out net income into revenue and expenses, we can either break out revenue in terms of revenue and expenses and then calculate net income, or we can just recognize the components of revenue and expenses and note that revenue then will increase equity, $220,000 and expenses will decrease the total equity. So I'll put that in as a negative, $170,000. Now obviously if we were to sum those two up, if I was to take the $220,000 minus the $170,000, that would be net income, a net increase to the equity. But we can just put these two in our calculation. That'll be a bit faster if we're just punching this into a calculator, $155,000 increased by $220,000 minus the expenses of $170,000. And let's make the abbreviation a little bit better. And that will give us the ending equity because we're not showing any investments or any draws at this point. So we're assuming there are none. So we're going to sum up and I'm going to do the math here, $155,000 plus $120,000 minus $170,000 gives us our total equity there. Then if we're going to have our accounted equation, assets equal liabilities plus equity, we can put these numbers in then equity being $205,000 and they gave us, what else did they give us? The company reported in revenue and that and expenses liabilities are $97,000. So we also know the $97,000 and we'll put the plus there and the equals there and that equals A. So the math from this point is nice and simple. We're just going to say A is equal to the $97,000 plus the $205,000 or the $302,000. So $97,000 plus $205,000 is the $302,000 ending answer being the total assets. A bit more of a tricky problem in that we had to do basically two calculations. So just keep those separate in your mind. First we had to figure out what the equity is at the end and then do our typical accounting equation type problem to figure out which component of the accounting equation, in this case assets, was not provided and was being asked for.