Question

(b) At the beginning of a recent year, JetBlue's assets were $6,020 million and its equity was $1,266 million. During the year, assets increased by $534 million and liabilities increased by $261 million. What was JetBlue's equity at the end of the year?

Answer 1

$1,539 million

Step-by-step explanation:

The accounting principle states that assets must equal liabilities plus owner's equity. If assets increased by $534 million and liabilities increased by $261 million, the amount by which equity increased is:

`E_i = A_i - L_i\\E_i= \$534 - \$261\\E_i=\$273\ million`

If the initial equity was $1,266 million, JetBlue's equity at the end of the year was:

`E = \$1,266+\$273\\E=\$1,539\ million`