Question

Dave Ryan is the CEO of Ryan's Arcade. At the end of its accounting period, December 31, Ryan's Arcade has assets of $643,800 and liabilities of $244,230. Using the accounting equation, determine the following amounts: a. Stockholders' equity as of December 31 of the current year. $ b. Stockholders' equity as of December 31 at the end of the next year, assuming that assets increased by $83,730 and liabilities increased by $18,540 during the year.

Answer 1

Answer and Explanation:

As we know that

Total assets = Total liabilities +  total stockholder equity

a. Stockholder equity s of December 31 of the current year is

$643,800 = $244,230 + total stockholder equity

So, the total stockholder equity is

= $643,800 - $244,230

= $399,570

b. Now in the case of increased, the total stockholder equity at the end of the year is

($643,800 + $83,730) = ($244,230 + $18,540) + total stockholder equity

$727,530 = $262,770 + total stockholder equity

So, the total stockholder equity is

= $727,530 - $262,770

= $464,760