Be-The-One is a motivational consulting business. At the end of its accounting period, December 31, 2015, Be-The-One has assets of $395,000 and liabilities of $97,000. 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 decreased by $65,000 and liabilities increased by $36,000 during 2016.
Answer:
a. A = L + SE
$395,000 = $97,000 + SE
SE = $298,000
b. A = L + SE
–$65,000 = +$36,000 + SE
SE = –$101,000
SE on December 31, 2016 = $298,000 – $101,000
SE on December 31, 2016 = $197,000
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