Question

A company began the year with assets of $107,000, liabilities of $23,500, and stockholders' equity of $83,500. During the year assets increased $55,700 and stockholders' equity increased $21,400. What was the change in liabilities for the year

Answer 1

An increase in liabilities of $32,200

Step-by-step explanation:

We can arrive at the answer by taking into account the accounting equation:

Assets = Liabilities + Equity

At the beginning of the year it was:

$107,000 = $23,500 + $83,500

$107,000 = $107,000

At the end of the year, assets had increased by $55,700, and equity increased by $21,400, we add these figures to the previous equation and obtain:

$107,000 + $55,700 = X + ($83,500 + $24,400)

$162,700 = X + $107,900

X represents liabilities, to equalize the equation, X is equal as follows:

$162,700 = $54,800 + $107,900

$162,700 = $162,700

The change in liabilities is $55,700 - $23,500 = $32,200