Question

At the end of last year, the company's assets totaled $870,000 and its liabilities totaled $745,000. During the current year, the company's total assets increased by $59,000 and its total liabilities increased by $24,500. At the end of the current year, stockholders' equity was:_________

Answer 1

Answer:

$159,500

Explanation:

Total assets = $870,000

Total liabilities = $745,000.

Total equity is the difference between the assets and liabilities according to the accounting equation. Therefore,

Total equity = $870,000 -  $745,000

= $125,000

Increase in asset during the year = $59,000

Increase in liabilities during the year = $24,500

Therefore, increase in equity

= $59,000 - $24,500

= $34,500

At the end of the current year, stockholders' equity is made up of the opening balance and the increase during the year. Hence,

current year's stockholders' equity = $125,000 + $34,500

= $159,500