Question

A company began the year with assets of $117,000, liabilities of $28,500, and stockholders' equity of $88,500. During the year assets increased $56,700 and stockholders' equity increased $23,400. What was the change in liabilities for the year?

Answer 1

Answer:

Change in liabilities = $33,300

Explanation

According to the accounting equation, assets is equal to liabilities + equity. And this equation can be re-written as:

Liabilities = assets - equity

Liabilities at the end of the period = assets at the end - equity at the end

Assets at the end= 117,000 + 56,700= 173,700

Equity at the end = 88,500 + 23,400 = 111,900

Liabilities at the end = 173,700 - 111,900=61800

Change in liabilities = Liabilities at the end - Liabilities at the beginning

Change in liabilities = 61,800 - 28,500= $33,300