Question

John Joos is the owner and operator of Way to Go LLC, a motivational consulting business. At the end of its accounting period, December 31, 2013, Way to Go has assets of $669,000 and liabilities of $161,000. Using the accounting equation, determine the following amounts:

a. Owner's equity as of December 31, 2013.
b. Owner's equity as of December 31, 2014, assuming that assets decreased by $127,000 and liabilities decreased by $39,000 during 2014.

Answer 1

a. $508,000

b. $420,000

Step-by-step explanation:

a. Assets = Equity + Liabilities

669,000 = Equity + 161,000

Equity = 669,000 - 161,000

Equity = $508,000

b. Assets = Equity + Liabilities

(669,000 - 127,000) = Equity + (161,000 - 39,000)

542,000 = Equity + 122,000

Equity = 542,000 - 122,000

= $420,000