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24 June, 14:52

T 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 the end of the year?

2. Office Store has assets equal to $123,000 and liabilities equal to $47,000 at year-end.

What is the total equity for Office Store at year-end?

3. 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?

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  1. 24 June, 15:17
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    1. Addison Company, Year end Equity $ 130,000

    2. Office Store, Year end equity $ 76.000

    3. Quaker Company, Beginning Equity $ 60,000, Year End Equity $ 125,000

    Explanation:

    1. Addison Company Computation of Year end equity

    Opening Equity $ 100,000

    By the fundamental accounting equation

    Assets = Liabilities + Equity

    The increases during the year are:

    $ 80,000 = $ 50,000 + Increase in equity

    By solving the equation, the increase in equity is $ 30,000

    Year end equity $ 130,000

    2. Office Store Computation of Year end equity

    Assets = Liabilities + Equity

    $ 123,000 = $ 47,000 + Equity

    By solving the equation

    Year end Equity is $ 76,000

    3. Quaker Company Computations

    Determination of opening equity balance

    Opening Assets = Year end asset 190,000 - Increase $ 60,000 = $ 130,000

    Opening Liabilities $ 70,000

    Assets - Liabilities = Owners Equity - Beginning $ 60,000

    Determination of ending equity balance

    Year End Liabilities = Opening Liabilities - Decrease

    $ 70,000 - $ 5,000 = $ 65,000

    Year end assets $ 190,000

    Year end Assets - Year end Liabilities = Year end Equity

    $ 190,000 - $ 65,000 = $ 125,000
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