Question

Megan Newell is the owner and operator of Ultima LLC, a motivational consulting business.

At the end of its accounting period, December 31, 2013, Ultima has assets of $942,000 and
liabilities of $584,000. Using the accounting equation, determine the following amounts:
a. Owner's equity as of December 31, 2013.
b. Owner's equity as of December 31, 2014, assuming that assets increased by $113,000
and liabilities increased by $44,000 during 2014.

Answer 1

a. Owner's equity as of December 31, 2013. $ 358.000

b. Owner's equity as of December 31, 2014 $ 427.000

Step-by-step explanation:

2.013 - 2.014

TOTAL ASSETS $942.000 $1.055.000

TOTAL LIABILITIES $584.000 - $628.000

TOTAL EQUITY $ 358.000 - $427.000

Total Assets = Total Liabilities + Total Equity

It means that the total assets of a company must be financed by debt plus Capital form the owners.