Question

Accounting Equation Terry Fleming is the owner and operator of Go-For-It LLC, a motivational consulting business. At the end of its accounting period, December 31, 2018, Go-For-It has assets of $808,000 and liabilities of $194,000. Using the accounting equation, determine the following amounts: a. Owner's equity as of December 31, 2018. b. Owner's equity as of December 31, 2019, assuming that assets increased by $154,000 and liabilities increased by $47,000 during 2019.

Answer 1

a The Owner's equity as of Dcember 31, 2018 $614,000 Workings: Assets = Liability + Owner's Equity $808,000 = $194,000 + Owner's Equity Owner's Equity = $808,000 - $194,000 = $614,000 b. The Owner's equity as of Dcember 31, 2019 $721,000 Workings: Owner's Equity = Assets - Liability = ($808,000 + $154.000) - ($194,000+ $47,000) $962,000 - $241,000 $721,000