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14 December, 21:30

Roger Company's Year 1 Balance Sheet has $150,000 in total assets and $100,000 in total liabilities. During the year, it paid off its $15,000 accounts payable using cash, and its accounts receivable increased by $4,000. It also bought $10,000 equipment using cash. If those are the only changes that occurred to Roger Company in Year 2, what are Roger Company's total assets and liabilities at the end of Year 2?

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  1. 14 December, 21:58
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    The answer is: In year 2, Roger Company's total assets are $139,000 and its total liabilities are $85,000.

    Explanation:

    We start with total assets and liabilities:

    Assets - we add accounts receivable and equipment, we subtract cash paid for accounts payable and equipment.

    Liabilities - we subtract accounts payable that were paid off

    Assets Liabilities

    End of year 1 $150,000 $100,000

    Accounts payable (paid) - $15,000

    Cash (paid AP) - $15,000

    Accounts receivable (added) $4,000

    Equipment (added) $10,000

    Cash (paid Equip) - $10,000

    End of year 2 $139,000 $85,000
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