Question

Lakeland Consulting started the year with total assets of $30,000 and total owner's equity of $20,000. During the year a) assets increased by $20,000, b) the business recorded $45,000 in revenues, c) the business recorded $30,000 in expenses, and d) the owner withdrew $5,000 for personal use. Liabilities at the end of the year were:

Answer 1

Liabilities at the end of the year were: $15,000.

Step-by-step explanation:

Using the Accounting Equation : Assets = Equity + Liability

Then we know that,

Liability = Assets - Equity

Opening Balance of Liabilities ( $30,000 - $20,000) = $10,000

Adjustment during the year ($20,000 - ($45,000 - $30,000)) = $5,000

Ending Balance of Liability = $15,000