Question

Answer the following questions. (Hint: Use the accounting equation.)

a. At the beginning of the year, Addison Company’s assets are \(300,000 and its equity is \)100,000. During the year, assets increase \(80,000 and liabilities increase \)50,000. What is the equity at year-end?

b. Office Store has assets equal to \(123,000 and liabilities equal to \)47,000 at year-end. What is the equity for Office Store at year-end?

c. At the beginning of the year, Quaker Company’s liabilities equal \(70,000. During the year, assets increase by \)60,000, and at year-end assets equal \(190,000. Liabilities decrease \)5,000 during the year. What are the beginning and ending amounts of equity

Short answer

Answer

The ending equity for part A is $130,000; for part B is $76,000; and for Part C, opening equity is $60,000, and ending equity is $125,000

Step-by-step solution

Step-by-Step SolutionStep 1 Calculation of equity

	Assets	=	Liabilities	+	Equity
Beginning	300,000		200,000		100,000
Change	80,000		50,000		30,000
Ending	380,000		250,000		130,000

Ending Equity =$130,000

Calculation of equity

	Assets	=	Liabilities	+	Equity
Ending	123,000		47,000		76,000

Ending equity = $76,000

Calculation of equity

	Assets	=	Liabilities	+	Equity
Beginning	130,000		70,000		60,000
Change	60,000		-5,000		65,000
Ending	190,000		65,000		125,000

Beginning Equity= $60,000

Ending Equity = $125,000