Accounting Equation III

Accounting Equation III

Use the accounting equation to answer each question that follow, show any calculation you make.

1.    The assets of Newport Corporation are $650,000, and Stockholder’s equity is $360,000. What is the amount of Liabilities?

2.    The Liabilities and stockholder’s equity of Fitzgerald Corporation are $95,000 and $32,000, respectively. What is amount of assets?

3.    At the beginning of year, picket Corporation’s assets were $220,000 and its stockholder’s equity was $100,000. During the year, assets increased $60,000 and liabilities decreased $10,000. What is the stockholder’s equity at the end of the year?

Answer:

1.                        Assets          =        Liabilities       +        Stockholder’s Equity

$650,000               290,000                         360,000

          So the amount of liabilities equal $290,000

2.                        Assets          =        Liabilities       +        Stockholder’s Equity

$127,000              95,000                             32,000

        So the amount of assets equal $127,000  

3.                       Assets          =        Liabilities       +        Stockholder’s equity

Beginning of year    $220,000               120,000                           100,000

Increasing              60,000                   (10,000)                           70,000

Ending of year        280,000                 110,000                           170,000

        So the stockholder’s equity at the end of year equal $170,000