Question

Middleton clinic had total assets of $500,000 and an equity balance of $350,000 at the end of 2014. one year later, at the end of 2015, the clinic had $575,000 in assets and $380,000 in equity. what was the clinic's dollar growth in assets during 2015, and how was this growth financed

Answer 1

The Middleton clinic's assets grew by $75,000 in 2015 and this growth was financed by an increase in equity.

Step-by-step explanation:

The Middleton clinic's dollar growth in assets during 2015 was $75,000. This can be calculated by subtracting the total assets at the end of 2014 ($500,000) from the total assets at the end of 2015 ($575,000).

The growth in assets was financed by an increase in equity. The equity balance at the end of 2014 was $350,000, and it increased to $380,000 at the end of 2015. Therefore, the clinic's equity increased by $30,000 in 2015, which was used to finance the growth in assets.

Answer 2

The total assets grew by 15% (75,000/500,000) and growth was financed in equity by $30,000 and liabilities by $45,000. An increase in equity could mean that the company incurred profit for the period or additional issuance of stocks in the equity. On the other hand, the increase in liability could mean that the company availed another loan from creditors.