Question

At the beginning of the year a company had $128,000 of liabilities. During the year, assets increased by $168000 and at year-end the assets equaled $384000. Liabilities decreased $28,000 during the year. Calculate the beginning and ending values of equity.

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Answer to a math question At the beginning of the year a company had $128,000 of liabilities. During the year, assets increased by $168000 and at year-end the assets equaled $384000. Liabilities decreased $28,000 during the year. Calculate the beginning and ending values of equity.

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Velda
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109 Answers
1. Use the accounting equation at the beginning of the year:
\text{Assets} = \text{Liabilities} + \text{Equity}

2. At the beginning of the year:
A_{\text{beginning}} = 128,000 + \text{Equity}_{\text{beginning}}

3. Let’s substitute the beginning asset value:
384,000 - 168,000 = 128,000 + \text{Equity}_{\text{beginning}}
216,000 = 128,000 + \text{Equity}_{\text{beginning}}
\text{Equity}_{\text{beginning}} = 216,000 - 128,000
\text{Equity}_{\text{beginning}} = 88,000

4. Use the accounting equation at the end of the year:
\text{Assets} = \text{Liabilities} + \text{Equity}

5. At the end of the year:
A_{\text{ending}} = (\text{128,000} - 28,000) + \text{Equity}_{\text{ending}}
\text{384,000} = 100,000 + \text{Equity}_{\text{ending}}
\text{Equity}_{\text{ending}} = 384,000 - 100,000
\text{Equity}_{\text{ending}} = 284,000

The beginning and ending values of equity are:

\text{Beginning Equity} = \$88,000

\text{Ending Equity} = \$284,000

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