Dream-It LLC is a motivational consulting business. At the end of its accounting period, December 31, 2015, Dream-It has assets of $780,000 and liabilities of $150,000. Using the accounting equation, 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 $90,000 and liabilities increased by $25,000 during 2016.
Answer:
a. A = L + SE
$780,000 = $150,000 + SE
SE = $630,000
b. A = L + SE
+$90,000 = +$25,000 + SE
SE = +$65,000
SE on December 31, 2016 = $630,000 + $65,000
SE on December 31, 2016 = $695,000
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