Question

1. During 2020, Bruske Company's assets decreased P50,000 and its liabilities decreased P50,000. Its owner's equity therefore:

a. increased P50,000.                                                b. decreased P50,000.

c. decreased P100,000.                                                            d. did not change.

2. At the beginning of the year, Ortiz Company had total assets of P900,000 and total liabilities of P440,000. During the year, total liabilities decreased P100,000 and owner's equity increased P200,000. What is the amount of total assets at the end of the year?

3. At the beginning of the year, Ortiz Company had total assets of P900,000 and total liabilities of P440,000. If total assets increased P50,000 during the year and owner's equity increased P60,000 during the year, what is the amount of total liabilities at the end of the year?

Answer 1

1.

If total assets decreased by P50,000 and liabilities decreased by P50,000 then owner's equity did not change.

As total assets = Total liabilities + Owner's equity

Since total assets and total liabilities decreased by P50,000 there will be no change in Owner's equity.

2.

Total assets = Total liabilities + Owner's equity

P900,000 = P440,000 + Owner's equity

Owner's equity = P900,000 - 440,000 = P460,000

Total assets = (P440,000-P100,000) + (P460,000+P200,000)

Total assets = P340,000 + P660,000

Total assets = P1,000,000

3.

Total assets = Total liabilities + Owner's equity

P900,000 = P440,000 + Owner's equity

Owner's equity = P900,000 - P440,000 = P460,000

(P900,000 + 50,000) = Total liabilities + (P460,000 + P60,000)

P950,000 = Total liabilities + P520,000

Total liabilities = P950,000 - P520,000 = P430,000