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Accounting Question - Please help?
At the beginning of the year, Logan Company's assets are $200,000 and its equity is $150,000. During the year, assets increase $70,000 and liabilities increase $30,000. What is the equity at the end of the year?
(Please show work)
2 Answers
- SandyLv 710 years agoFavorite Answer
The basic accounting equation is:
Assets = Liabilities + Equity, so at the beginning of the year, you had:
Assets $200,000 = Liabilities? + Equity $150,000, that means liabilities at the beginning of the year were $50,000
There were movements in assets, liabilities and equity during the year, and at the end of the year, you had:
Assets $270,000 = Liabilities $80,000 + Equity ?
so, Equity must have been $190,000 at the end of the year (i.e. an increase of $40,000)
- smahadevan39Lv 710 years ago
The difference of 70,000 - 30,000 = 40,000 is profit. It can be retained as profit or can be merged with capital. In that case the capital ( equity) will be %190,000
