Exercise 1-8 Using the accounting
equation L.O. A1, P1
Answer the following questions. (Hint:
Use the accounting equation.) (Omit the
"$" sign in your response.)
|
Exercise 1-8 Part a
a.
|
Office Mart has assets equal to
$120,000 and liabilities equal to $83,000 at year-end. What is the total
equity for Office Mart at year-end?
|
Total equity
|
$
37,000
 |
Explanation:
Assets
|
=
|
Liabilities
|
+
|
Equity
|
$120,000
|
=
|
$83,000
|
+
|
$37,000
|
Exercise 1-8 Part b
b.
|
At the beginning of the year,
Logan Company's assets are $162,000 and its equity is $121,500. During the
year, assets increase $80,000 and liabilities increase $57,000. What is the
equity at the end of the year?
|
Equity at the end of
the year
|
$
144,500
|
Explanation:
Using the accounting equation at
the beginning of the year:
|
Assets
|
=
|
Liabilities
|
+
|
Equity
|
$162,000
|
=
|
$40,500
|
+
|
$121,500
|
Using the accounting equation at
the end of the year:
|
Assets
|
=
|
Liabilities
|
+
|
Equity
|
$162,000
+ $80,000
|
=
|
$40,500
+ $57,000
|
+
|
Equity
|
$242,000
|
=
|
$97,500
|
+
|
$144,500
|
Exercise 1-8 Part c
c.
|
At the beginning of the year,
Keller Company's liabilities equal $64,000. During the year, assets increase
by $60,000, and at year-end assets equal $190,000. Liabilities decrease
$19,000 during the year. What are the beginning and ending amounts of equity?
|
Beginning equity
|
$
66,000
|
Ending equity
|
$
145,000
|
Explanation:
Using the accounting equation at
the end of the year:
|
Assets
|
=
|
Liabilities
|
+
|
Equity
|
$190,000
|
=
|
$64,000
– $19,000
|
+
|
Equity
|
$190,000
|
=
|
$45,000
|
+
|
$145,000
|
Using the accounting equation at
the beginning of the year:
|
Assets
|
=
|
Liabilities
|
+
|
Equity
|
$190,000
– $60,000
|
=
|
$64,000
|
+
|
Equity
|
$130,000
|
=
|
$64,000
|
+
|
$66,000
|
