Question

For the two unrelated situations below, compute the unknown amounts indicated by the letters (a) and (b).

	(1)	(2)
Beginning:
Assets	$42,000	$61,000
Liabilities	18,000	24,000
Ending:
Assets	48,000	68,000
Liabilities	15,000	(b)
During the year:
Stock issued	(a)	4,000
Revenues	28,000	45,000
Dividends paid	5,000	3,000
Expenses	16,000	37,000

Answer 1

A) $ 2,000

B) $ 22,000

Working:

A. Ending Equity = Beginning Equity + Stock Issued + Revenue - Expenses -Dividends Paid

[48000-15000] = [42000-18000] + Stock Issued + 28000 - 16000 - 5000

33000 = 31000 + Stock Issued

Stock Issued = $ 2000 [33000-31000]

B. Ending Liabilities = Ending Assets - Ending Equity

Ending Liabilities = 68000 -{ [Beginning Equity + Stock Issued + Revenue - Expenses -Dividends Paid ]

Ending Liabilities = 68000 -{ [61000-24000] + 4000+45000-37000-3000]}

Ending Liabilities = 68000 -46000 = 22000