At the beginning of the year, a company had $175,000 worth of liabilities. During the year, assets decreased by $25,000 and at year-end they equaled $290,000. Liabilities increased by $35,000 during the year. Calculate the beginning and ending values of equity.
Solution
Solution
Ending Assets = $290,000
Beginning Assets = $290,000 + $25,000 = $315,000
Beginning Liabilities = $175,000
Ending Liabilities = $175,000 + $35,000 = $210,000
Equity = Assets - Liability
Beginning Equity = Beginning Assets - Beginning Liabilities = $315,000 - $175,000 = $140,000
Ending Equity = Ending Assets - Ending Liabilities = $290,000 - $210,000 = $80,000
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