Question

At the beginning of the year, Addison Company's assets are $273,000 and its equity is $204,750. During the year, assets increase $80,000 and liabilities increase $42,000. What is the equity at the end of the year?

Answer 1

The equity (E) is the difference of the assets (A) and the liabilities (L). It can be expressed mathematically as,
E = A - L
Substituting the known values,
E = ($273000 + $80,000) - $42,000 = $311000
Add the equity at the beginning of the year to get the final equity,
E = $311000 + $204,750 = $515750