Answer: To find the change in assets, we need to understand the accounting equation, which is:
Assets = Liabilities + Stockholders' Equity
Given that liabilities increased by $10,000, we can represent the new liabilities as L + $10,000.
Also, stockholders' equity decreased by $5,000, so we can represent the new stockholders' equity as E - $5,000.
Now, we can find the new assets (A') using the updated accounting equation:
A' = (L + $10,000) + (E - $5,000)
Now, we want to find the original assets (A), not the new ones. The original assets (A) can be represented as:
A = L + E
Substitute this into the equation for the new assets (A'):
A' = (A) + $10,000 - $5,000
Simplify:
A' = A + $5,000
This tells us that the new assets (A') increased by $5,000 compared to the original assets (A). Therefore, to find the new assets (A'), you would add $5,000 to the original assets (A).