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22 December, 04:06

A company began the year with assets of $117,000, liabilities of $28,500, and stockholders' equity of $88,500. During the year assets increased $56,700 and stockholders' equity increased $23,400. What was the change in liabilities for the year?

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  1. 22 December, 05:38
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    Change in liabilities = $33,300

    Explanation

    According to the accounting equation, assets is equal to liabilities + equity. And this equation can be re-written as:

    Liabilities = assets - equity

    Liabilities at the end of the period = assets at the end - equity at the end

    Assets at the end = 117,000 + 56,700 = 173,700

    Equity at the end = 88,500 + 23,400 = 111,900

    Liabilities at the end = 173,700 - 111,900=61800

    Change in liabilities = Liabilities at the end - Liabilities at the beginning

    Change in liabilities = 61,800 - 28,500 = $33,300
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