At the beginning of the year, Morales Company had total assets of $865,000 and t
ID: 2606789 • Letter: A
Question
At the beginning of the year, Morales Company had total assets of $865,000 and total liabilities of $517,000. (Treat each item independently.)
(a) If total assets increased $170,000 during the year and total liabilities decreased $73,000, what is the amount of stockholders’ equity at the end of the year?
(b) During the year, total liabilities increased $103,000 and stockholders’ equity decreased $80,000. What is the amount of total assets at the end of the year?
(c) If total assets decreased $87,000 and stockholders’ equity increased $106,000 during the year, what is the amount of total liabilities at the end of the year?
Explanation / Answer
total assets =total liabilities+total equity
Hence total equity at beginning=(865000-517000)=$348000
a.Total assets at end=(865000+170,000)=$1035000
Total liabilities at end=(517000-73000)=$444,000
Hence total equity=(1035000-444000)=$591000.
b.Total liabilites=(517000+103000)=$620,000
Total equity=(348000-80,000)=$268000
Hence total assets=(620,000+268000)=$888,000
c.Total assets=(865000-87000)=$778000
Total equity=(348000+106000)=$454000
Hence total liabilities=(778000-454000)=$324000.
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