Question

c. At the beginning of the year, Quaker Company's liabilities equal $41,000. During the year, assets increase by $60,000, and at year-end assets equal $190,000. Liabilities decrease $7,000 during the year. What are the beginning and ending amounts of equity

Answer 1

Answer:

Beginning Equity = $89,000

Ending Equity = $156,000

Explanation:

Data provided in the question:

Beginning liabilities =  $41,000

Increase in assets = $60,000

Ending assets = $190,000

Decrease in liabilities = $7,000

Now,

Beginning Assets = Ending assets - Increase in assets

=  $190,000 - $60,000

= $130,000

Ending liabilities = Beginning liabilities - Decrease in liabilities

= $41,000 - $7,000

= $34,000

Also,

Assets = Equity + Liabilities

Therefore,

Beginning Assets = Beginning Equity + Beginning Liabilities

$130,000 =  Beginning Equity + $41,000

or

Beginning Equity = $130,000 - $41,000

= $89,000

Ending Assets = Ending Equity + Ending Liabilities

$190,000 =  Ending Equity + $34,000

or

Ending Equity = $190,000 - $34,000

= $156,000