Question

If total assets increased $150,000 during the year and total liabilities decreased $60,000, what is the amount of owner’s equity at the end of the year?

Answer 1

$710,000

Step-by-step explanation:

The computation of the owner’s equity at the end of the year is given below:

We know that

Accounting equation equals to

Total assets = Total liabilities + owners equity

where,

Total assets = $800,000 + $150,000 = $950,000

And, the total liabilities = $300,000 - $60,000 = $240,000

So, the owners equity at the end of the year would be

= $950,000 - $240,000

= $710,000