Question

Accounting Equation Annie Rasmussen is the owner and operator of Go44, a motivational consulting business. At the end of its accounting period, December 31, 2018, Go44 has assets of $625,790 and liabilities of $197,750. Using the accounting equation and considering each case independently, determine the following amounts.A. Annie Rasmussen, capital, as of December 31, 2018. 428,040B. Annie Rasmussen, capital, as of December 31, 2019, assuming that assets increased by $98,870 and liabilities increased by $59,450 during 2019. 467,460C. Annile Rasmussen, capital, as of December 31, 2019, assuming that assets decreased by $49,440 and liabilities increased by 17,520 during 2019 400-500.D. Annie Rasmussen, capital, as of December 31, 2019, assuming that assets increased by $82,600 and liabilities decreased $31,290 during 2019. 14,390E. Net income (or net loss) during 2019, assuming that as of December 31, 2019, assets were $913,200, liabilities were $148,580, and there were no additional investments or withdrawals. 660,210

Answer 1

Go44

A. Annie Rasmussen, capital, as of December 31, 2018. 428,040

Capital = Assets - Liabilities

= $628,790 - 197,750

= $431,040

B. Annie Rasmussen, capital, as of December 31, 2019, assuming that assets increased by $98,870 and liabilities increased by $59,450 during 2019. 467,460

Capital = Assets - Liabilities

= ($628,790 + 98,870) - (197,750 + 59,450)

= $727,660 - 257,200

= $470,460

C. Annile Rasmussen, capital, as of December 31, 2019, assuming that assets decreased by $49,440 and liabilities increased by 17,520 during 2019 400-500.

Capital = Assets - Liabilities

= ($628,790 - 49,440) - (197,750 + 17,520)

= $579,350 - 215,270

= $364,080

D. Annie Rasmussen, capital, as of December 31, 2019, assuming that assets increased by $82,600 and liabilities decreased $31,290 during 2019. 14,390

Capital = Assets - Liabilities

= ($628,790 + 82,600) - (197,750 - 31,290)

= $711,390 - 166,460

= $544,930

E. Net income (or net loss) during 2019, assuming that as of December 31, 2019, assets were $913,200, liabilities were $148,580, and there were no additional investments or withdrawals. 660,210

Assets = Liabilities + Equity (Capital + Retained Earnings or Net Income or Loss)

= $913,200 = ($148,580 + $431,040 + Net Income)

Net Income = $913,200 - 579,620

= $333,580

Step-by-step explanation:

Go44 Balance Sheet as of December 31, 2018:

Assets = $628,790

Liabilities 197,750

Equity = $431,040

b) Accounting equation is Assets = Liabilities + Equity. Equity includes owner's capital and accumulated profits (Retained Earnings).

c) The accounting equation shows that the value of Go44's assets will always be equal to the liabilities and equity.