Question

At the beginning of the year, Canon Company had total assets of $870,000 and total liabilities of $500,000. Answer the following questions.

(a) If total assets increased $150,000 during the year and total liabilities decreased $80,000, what is the amount of stockholders’ equity at the end of the year?

Stockholders’ equity $__________

(b) During the year, total liabilities increased $100,000 and stockholders’ equity decreased $66,000. What is the amount of total assets at the end of the year?

Total Assets $_______

(c) If total assets decreased $80,000 and stockholders’ equity increased $120,000 during the year, what is the amount of total liabilities at the end of the year?

Total liabilities $_________

Answer 1

Initial Asset = $870,000

Initial Liabilities = $500,000

Asset = Liability + Equity

Equity = 870000 - 500000 = $370,000

a.

Asset Increased by $150,000 and Liability decreased by $80,000

Equity = (870000+150000) - (500000 - 80000)

Equity = $600,000

b.

Total Liabilities increased $100,000 and Stockholders’ Equity decreased $66,000

Asset = (500000 + 100000) -66000

Asset = $534,000

c.

Total Assets decreased $80,000 and Stockholders’ Equity increased $120,000

Liability = (870000 - 80000) - (370000 + 120000)

Liability = $300,000