Question

1. Compute the missing amount in the accounting equation for each entity from the financial information presented Assets $ 89,000 Llabilities 31,000 $ Auto Parts and Tires Weekly Slop Grocery Your Basket Equity 39,000 45,000 100.000 58,000 2. Star Nursery started 2018 with total assets of $24,000 and total liabilities of $5,000. At the end of 2018, Star Nursery's total assets stood at $31,000 and total liabilities were $8,000. Requirements 1. Did the stockholders' equity of Star Nursery increase or decrease during 2018? By how much? 2. Identify the four possible reasons that stockholders equity can change. Requirement 1. Did the stockholders' equity of Star Nursery Increase or decrease during 2018? By how much? The stockholders' equity (1) during the year by $ . Requirement 2. Identify the four possible reasons that stockholders' equity can change. Stockholders' equity can increase through: (2) — and/or (3) Stockholders' equity can decrease through (4) - and/or (5) (1) O increased decreased (2) O borrowing money O dividend payment O issuance of common stock O net loss O paying a liability O purchasing assets for cash O purchasing assets on account (3) Oborrowing money Opaying a liability O dividend payment O purchasing assets for cash O net income O purchasing assets on account O net loss (4) Oborrowing money dividend payment issuance of common stock O net income O paying a liability O purchasing assets for cash O purchasing assets on account (5) Oborrowing money O issuance of common stock O net income Onet loss O paying a liability O purchasing assets for cash O purchasing assets on account

Answer 1

			Assets	Liabilities	Equity
1)	Auto parts & Tires		70000	31000	39000
	Weckly Slope Grocery		89000	44,000	45000
	Your basket		100000	58000	42000
	Auto parts & Tires
	Assets	=	Liabilties	+	Equity
		=	31000	+	39000
		=	70,000
	Weckly Slope Grocery
	89000	=	Liabilties	+	45000
	44,000	=	Liabilties
	(89000-45000)
	Your basket
	1,00,000	=	58000	+	Equity
	42000	=	Equity
	(100000-58000)
2)	Opening (2018)
	Assets	=	Liabilties	+	Equity
	24000	=	5000	+	Equity
	19,000	=	Equity
	(24000-5000)
	Closing (2018)
	31000	=	8000	+	Equity
	23,000	=	Equity
	(31000-8000)
	The shareholder's equity Increased (1) during the year by 4000 (23000-19000)

Shareholder equity can increase through				Issuance of common stock (2)			and/or	Net income (3)		Shareholder's equity can decrease through
dividend payment (4)		and/or	Net loss (5)