Accounting Equation Annie Rasmussen is the owner and operator of Go44, a motivat

Question

Accounting Equation Annie Rasmussen is the owner and operator of Go44, a motivational consulting business. At the end of its accounting period, December 31, 2018, Go44 has assets of $797,000 and iabilities of $251,350. Using the accounting equation and considering each case independently, determine the following amounts. Annie Rasmussen, capital, as af December 31, 2018. 945150 b. Annie Rasmussen, capital, as of December 31, 2019, assuming that assets increased by $125,930 and liabilities increased by $75,720 during 2019, c. Annie Rasmussen, capital, as of December 31, 2019, assuming that assets decreased by $62,960 and liablities increased by $22,320 during 2019. d. Annie Rasmussen, capital, as of December 31, 2019, assuming that assets increased by $105,200 and liabilities decreased by $39,850 duning 2019. e. Net income (or net loss) during 2019, assuming that as of December 31, 2019, assets were $1,004,220 liabilities were $163,390, and there were no additional investments or withdrawals 2956 80

Explanation / Answer

(a) Assets as at December 31, 2018 = $797,000

Liabilities as at December 31, 2018 = $251,850

Capital as at December 31, 2018 = Assets as at December 31, 2018 - Liabilities as at December 31, 2018

= 797,000 - 251,850

= $545,150

(b) During 2019, assets increased by $125,930 and liabilities increased by $75,720

Hence, assets as at December 31, 2019 = 797,000 + 125,930

= $922,930

Hence, liabilities as at December 31, 2019 = 251,850 + 75,720

= $327,570

Capital as at December 31, 2019 = Assets as at December 31, 2019 - Liabilities as at December 31, 2019

= 922,930 - 327,570

= $595,360

(c)

During 2019, assets decreased by $62,960 and liabilities increased by $22,320

Hence, assets as at December 31, 2019 = 797,000 - 62,960

= $734,040

Hence, liabilities as at December 31, 2019 = 251,850 + 22,320

= $274,170

Capital as at December 31, 2019 = Assets as at December 31, 2019 - Liabilities as at December 31, 2019

= 734,040 - 274,170

= $459,870

(d)

During 2019, assets increased by $105,200 and liabilities decreased by $39,850

Hence, assets as at December 31, 2019 = 797,000 + 105,200

= $902,200

Hence, liabilities as at December 31, 2019 = 251,850 - 39,850

= $212,000

Capital as at December 31, 2019 = Assets as at December 31, 2019 - Liabilities as at December 31, 2019

= 902,200 - 212,000

= $690,200

(e)

Assets as at December 31, 2019 = $1,004,220

Liabilities as at December 31, 2019 = $163,390

Capital as at December 31, 2019 = Assets as at December 31, 2019 - Liabilities as at December 31, 2019

= 1,004,220 - 163,390

= $840,830

Profit earned during 2019 = Capital as at December 31, 2019 - Capital as at December 31, 2018

= 840,830 - 545,150

= $295,680

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