Question

Alex Hayden is the sole stockholder and operator of Elevate and Succeed, a motivational consulting business. At the end of its accounting period, December 31, 20Y7, Elevate and Succeed has assets of $1,200,000 and liabilities of $375,000. Using the accounting equation and considering each case independently, determine the following amounts:

a. Stockholders' equity, as of December 31, 20Y7.
$

b. Stockholders’ equity, as of December 31, 20Y8, assuming that assets increased by $150,000 and liabilities increased by $80,000 during 20Y8.
$

c. Stockholders’ equity, as of December 31, 20Y8, assuming that assets decreased by $200,000 and liabilities increased by $100,000 during 20Y8.
$

d. Stockholders’ equity, as of December 31, 20Y8, assuming that assets increased by $400,000 and liabilities decreased by $75,000 during 20Y8.
$

e. Net income (or net loss) during 20Y8, assuming that as of December 31, 20Y8, assets were $1,275,000, liabilities were $290,000, and there were no dividends and no additional common stock was issued.
$

Answer 1

Step-by-step explanation:

We know that

Accounting equation is

Total assets = Total liabilities + Shareholder equity

1. So, The equity would be

= $1,200,000 - $375,000

= $825,000

2. The equity would be

Total assets = $1,200,000 + $150,000 = $1,350,000

Total liabilities = $375,000 + $80,000 = $455,000

So, the equity is

= $1,350,000 - $455,000

= $895,000

3. The equity would be

Total assets = $1,200,000 - $200,000 = $1,000,000

Total liabilities = $375,000 + $100,000 = $475,000

So, the equity is

= $1,000,000 - $475,000

= $525,000

4. The equity would be

Total assets = $1,200,000 + $400,000 = $1,600,000

Total liabilities = $375,000 - $75,000 = $300,000

So, the equity is

= $1,600,000 - $300,000

= $1,300,000

5. The net income is

= Total assets - total liabilities - beginning stockholder equity

= $1,275,000 - $290,000 - $825,000

= $160,000