Answer:
a) Stockholders' equity = $411,690
b) Stockholders' equity = $477,930
Explanation:
Accounting equation is defined as Assets = Liabilities + Equity.
a) If t the end of its accounting period, December 31, Ryan's Arcade has assets of $632,000 and liabilities of $220,310, the Stockholders' equity as of December 31 of the current year would be determined as follows:
$632,000 = $220,310 + Equity
Stockholders' equity = $632,000 - $220,310
Stockholders' equity = $411,690
b) If assets increased by $84,040 and liabilities increased by $17,800 during the next year, then Stockholders' equity would be determined as follows:
$632,000 + $84,040 = $220,310 + $17,800 + Equity
$716,040 = $238,110 + Equity
Stockholders' equity = $477,930
