Question

Janet Company began the year with total assets of $129,000, liabilities of $77,000, and equity of $52,000. During the year, the company earned revenue of $113,000 and paid expenses of $34,000. Calculate the amount of company's equity at year-end?

Answer 1

The year-end equity of Janet Company is calculated by adding the net income of $79,000 (revenue minus expenses) to the beginning equity of $52,000, resulting in an ending equity of $131,000.

Step-by-step explanation:

The question asks to calculate the year-end equity of Janet Company, which began the year with total assets of $129,000, liabilities of $77,000, and equity of $52,000. During the year, the company earned revenue of $113,000 and incurred expenses of $34,000.

To calculate the year-end equity, we need to determine the net income first by subtracting the expenses from the revenue: $113,000 (revenue) - $34,000 (expenses) = $79,000 (net income). This net income is added to the beginning equity to get the ending equity.

Beginning equity: $52,000

Net income: $79,000

Year-end equity: $52,000 + $79,000 = $131,000