Question

Be-The-One is a motivational consulting business. At the end of its accounting period, December 31, 2017, Be-The-One has assets of $395,000 and liabilities of $97,000.
Using the accounting equation, determine the following amounts:

a. Stockholders' equity as of December 31, 2017.

b. Stockholders' equity as of December 31, 2018, assuming that assets decreased by $65,000 and liabilities increased by $36,000 during 2018.

Answer 1

Answer:

a. Stockholders' equity as of December 31, 2017: $298,000

b. Stockholders' equity as of December 31, 2018: $197,000

Explanation:

Basing on accounting equation:

Total asset = Liabilities + Owner's (or Stockholders') Equity

Stockholders' Equity  = Total asset - Liabilities

a. On December 31, 2017, Be-The-One has assets of $395,000 and liabilities of $97,000.

Stockholders' equity as of December 31, 2017 = $395,000 - $97,000 = $298,000

b. On December 31, 2018

Total asset = $395,000 - $65,000 = $330,000

Liabilities = $97,000 + $36,000 = $133,000

Stockholders' equity as of December 31, 2018 = $330,000 - $133,000 = $197,000