Equity at the end of the year = $130,000
Step-by-step explanation:
Step 1:
Given ,
Asset of the company at beginning of year = $300,000
Equity of the company at beginning of year = $100,000
Increase of the assets during the year = $80,000
Increase of the liabilities during the year = $50,000
We need to find the equity at the year end.
Step 2 :
The equity at any point can be obtained by using the formula
equity = assets - liability
At the beginning of the year ,
100,000 = 300,000 - liability
So liability = 300,000 - 100,000 = 200,000
Step 3 :
During the year, assets increase $80,000 and liabilities increase $50,000
So assets at the year end = 300,000 + 80,000 = $380,000
liabilities at the year end = 200,000 + 50,000 = $250,000
Therefore
Equity at the year end = 380,000 - 250,000 = $130,000
Step 4 :
Answer :
Equity at the year end = $130,000
