Question

At the beginning of the year, Rocket Racer Company's liabilities equal $149,000. During the year, assets increase by $35,000, and at year-end assets equal $215,000. Liabilities decreased $50,000 during the year. What are the beginning and ending amounts of Stockholders’ Equity? Group of answer choices

Answer 1

Beginning Equity is $31,000

Ending Equity is $116,000

Step-by-step explanation:

First, we need to determine the available value

Beginning company's liabilities = $149,000

Ending Company's Asset = $215,000

Increase in Asset during the year = $35,000

Decrease in liabilities during the year = $50,000

Now we need to determine the beginning Assets value

Ending Company's Asset = Beginning company's Assets + Increase in Asset during the year

$215,000 = Beginning company's Assets + $35,000

Beginning company's Assets = $215,000 - $35,000

Beginning company's Assets = $180,000

Now calculate the beginning equity of the company

Beginning Equity = Beginning company's Assets - Beginning company's Liabilities = $180,000 - $149,000 = $31,000

Now calculate the ending comapnies liabilities

Ennding comapnies liabilities = Beginning company's Liabilities - Decrease in liabilities during the year = $149,000 - $50,000 = $99,000

Now calculate the ending equity of the company

Ending Equity = Ending Company's Asset - Ennding comapnies liabilities = $215,000 - $99,000 = $116,000