Question

At the beginning of 2016, a corporation had assets of $350,000 and liabilities of $230,000. During 2016, assets increased $20,000 and liabilities increased $5,000. What was stockholders' equity at December 31, 2016

Answer 1

Answer:

$135,000

Explanation:

Equity is the difference between the assets and liabilities of an entity.

Using the accounting equation;

Assets - Liabilities = Equity

Given;

Opening assets balance = $350,000

Opening liabilities balance = $230,000

Therefore;

Opening balance of equity = $350,000 - $230,000

= $120,000

Increase in asset = $20,000

Increase in liabilities = $5,000

Increase in equity = $20,000 - $5,000

= $15,000

Balance of stockholders' equity at December 31, 2016 = $120,000 + $15,000

= $135,000