Question

Exercise 1-9 Part G. At the beginning of the year, Quaker Company's liabilities equal $58,000. During the year, assets increase by $60,000, and at year. end assets equal $190,000. Liabilities decrease $6,000 during the year. What are the beginning and ending amounts of equity? $ Beginning Change Ending Answer is complete but not entirely correct. Assets - Liabilities - Equity 130,000 - $ 58,000 + $ 72.000 60,000 = 16,000) + 54,000® 190,000 = $ 64,000 S 126,000 $

Answer 1

Ending liabilities:

This would be the difference of beginning liabilities and change liabilities; (58,000 – 6,000 =) 52,000; this is subtracted, because the change is negative.

Ending equity:

This is the difference of ending assets and ending liabilities; (190,000 – 52,000 =) 138,000; this is subtracted because an accounting equation is [Assets = Liabilities + Equity].

Change equity:

This is the difference of beginning equity and ending equity; (138,000 – 72,000 =) 66,000; this is subtracted because the figure is cross tallied horizontally as (60,000 – (6,000) = 60,000 + 6,000 =) 66,000.

All the other figures are correct.

$ $ $ Beginning Change 130.000 60.000 190,000 = = 58,000 16,000) 52,000 72.000 66,000 138,000 Ending $ $ $