Question

Crystal Lodging recorded $330,000 in revenues, $247,500 in expenses, and $45,000 of dividends for the year. The company began the year with total assets of $285,000 and stockholder's equity of $130,500. Suppose that liabilities increased by $90,000 and stockholders' equity increased by $37,500. What would be the change in Crystal Lodging's assets? Multiple Choice a.$168,000 Increase b.$127,500 increase c.$154,500 increase

Answer 1

Answer:

b.$127,500 increase

Explanation:

Using Accounting Equation we can find thetotal increase in total assets:

Assets = Equity + Liabilities

Change in Assets = Change in Equity + Change in Liabilities

Change in Assets = $37,500 + $90,000

Change in Assets = $127,500

Total Change in equity and liabilities will be equal to the change in Assets.

So, the correct answer is b.$127,500 increase.