Answer:
Inspirational Inc.
a. Stockholders' equity as of October 31, 20Y2
= $558,080
b. Stockholders' equity as of October 31, 20Y3, assuming that assets increased by $128,910 and liabilities increased by $77,510 during 20Y3.
= $609,480
c. Stockholders' equity as of October 31, 20Y3, assuming that assets decreased by $64,460 and liabilities increased by $22,850 during 20Y3.
=$470,770
d. Stockholders' equity as of October 31, 20Y3, assuming that assets increased by $107,700 and liabilities decreased by $40,800 during 20Y3.
= $706,580
e. Net income (or net loss) during 20Y3, assuming that as of October 31, 20Y3, assets were $1,028,050, liabilities were $167,260, and no additional common stock was issued or dividends paid.
= $302,710
Step-by-step explanation:
1) Data and Calculations:
a) Assets of $815,910
Liabilities of $257,830
Stockholders' equity = $558,080 ($815,910 - $257,830)
b) Assets of $944,820 ($815,910 + $128,910)
Liabilities of $335,340 ($257,830 + $77,510)
Stockholders' equity = $609,480 ($944,820 - $335,340)
c) Assets of $751,450 ($815,910 - $64,460)
Liabilities of $280,680 ($257,830 + $22,850)
Stockholders' equity = $470,770 ($751,450 - $280,680)
d) Assets of $923,610 ($815,910 + $107,700)
Liabilities of $217,030 ($257,830 -$40,800)
Stockholders' equity = $706,580 ($923,610 - $217,030)
e) Assets of $1,028,050
Liabilities of $167,260
Stockholders' equity = $558,080
Net Income = $302,710 (Assets - (Liabilities + Equity))
f) These different transactions and changes show that the accounting equation is always in balance. This means that the assets of Inspirational Inc. will always be equal to the liabilities + equity. The reason for this situation is that assets are funded by either liabilities or equity or a combination of these two financing sources.