Go44 is a motivational consulting business. At the end of its accounting period, December 31, 2015, Go44 has assets of $720,000 and liabilities of $180,000. Using the accounting equation and considering each case independently, determine the following amounts:
a. Stockholders’ equity as of December 31, 2015.
b. Stockholders’ equity as of December 31, 2016, assuming that assets increased by $96,500 and liabilities increased by $30,000 during 2016.
c. Stockholders’ equity as of December 31, 2016, assuming that assets decreased by $168,000 and liabilities increased by $15,000 during 2016.
d. Stockholders’ equity as of December 31, 2016, assuming that assets increased by $175,000 and liabilities decreased by $18,000 during 2016.
e. Net income (or net loss) during 2016, assuming that as of December 31, 2016, assets were $880,000, liabilities were $220,000, and no additional common stock was issued or dividends paid.
Answer:
a. $540,000 ($720,000 – $180,000)
b. $606,500 ($540,000 + $96,500 – $30,000)
c. $357,000 ($540,000 – $168,000 – $15,000)
d. $733,000 ($540,000 + $175,000 + $18,000)
e. Net income: $120,000 ($880,000 – $220,000 – $540,000)
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