On January 1, Year 3, Wayfarer Co.'s assets were $330,000 and its stockholders' equity was $146,000. During the year, assets increased $18,000 and liabilities decreased $16,000. Required: Determine the amount of stockholders' equity at December 31, Year 3.

Equity at December 31 Year 3 = $180000

Explanation:

Basic principle of Accounting The total Assets are equal to to sum of total Liabilities and Shareholders equity and these two sides must always balance

Beggining of the year given A = $330000 E = $146000 L = ?

A = L + E

330000 = L + 146000

L = $184000 remember the golden rule has to balance.

At year end assets increased by $18000 and liabilities decreased by $16000

A = 330000+18000 = $348 000, L = 184000-16000=$168000

Back to the Equation

A = L + E

348000 = 168000 + E

E = 348000 - 168000 = $180000

Prove the golden rule 180000+168000 = $348000 which is the total assets

Equity at December 31 Year 3 = $180000

The Balance of stockholder's equity at December 31 Year 3 is $180000.

Explanation:

The basic accounting equation states that Assets are always equal to the sum of Liabilties and Equity.

Thus, the equation can be written as:

Assets = Liabilities + Equity

The libilities at the start of the year were,

330000 = Liabilities + 146000

Liabilities = 330000 - 146000 = $184000

If Liabilities at the end were 16000 less than at start, Closing balance of Liabilities will be 184000 - 16000 = $168000

The Closing balance of assets will be 330000 + 18000 = $ 348000

The closing balance of Stockholder's equity at Dec 31 Year 3 is:

348000 = 168000 + Equity

Equity = 348000 - 168000 = $180000