Question

Accounting Equation Jan Petri is the stockholder and operator of Way to Go LLC, a motivational consulting business. At the end of its accounting period, December 31, 20Y2, Way to Go has assets of $798,000 and liabilities of $192,000. Using the accounting equation, determine the following amounts:
a. Stockholders' equity as of December 31, 20Y2. $
b. Stockholders' equity as of December 31, 20Y3, assuming that assets decreased by $152,000 and liabilities decreased by $46,000 during 20Y3. $

Answer 1

Answer:

a. $606,000

b. $500,000

Explanation:

As we know that

Accounting equation is

Total assets = Total stockholder equity + Total liabilities

a. The total stockholder equity is

= Total assets - total liabilities

= $798,000 - $192,000

= $606,000

b. Now in case of decrease in assets and liabilities, the total stockholder equity is

= Total assets - total liabilities

= ($798,000 - $152,000) - ($192,000 - $46,000)

= $646,000 - $146,000

= $500,000