Question

At the beginning of the year, Gilles Company had total assets of $800,000 and total liabilities of $300,000. Answer the following questions. (a) If total assets increased $150,000 during the year and total liabilities decreased $60,000, what is the amount of owner's equity at the end of the year? (b) During the year, total liabilities increased $100,000 and owner's equity decreased $70,000. What is the amount of total assets at the end of the year? (c) If total assets decreased $80,000 and owner's equity increased $120,000 during the year, what is the amount of total liabilities at the end of the year? g

Answer 1

Answer and Explanation:

Accounting equation is

Total assets = Total liabilities + Shareholder equity

The equity would be

= $800,000 - $300,000

= $500,000

a. The equity would be

Total assets = $800,000 + $150,000 = $950,000

Total liabilities = $300,000 -$60,000 = $240,000

So, the equity is

= $950,000 - $240,000

= $710,000

b. Total assets  

Total liabilities = $300,000 + $100,000 = $400,000

Owner equity = $500,000 - $70,000 = $430,000

So, the total assets is  

= $400,000 + $430,000

= $830,000

c. Total liabilities equal to

Total assets = $800,000 - $80,000 = $720,000

Total equity = $500,000 + $120,000 = $620,000

So, the total liabilities

= $720,000 - $620,000

= $100,000