Asked by Krystina Edwards on May 22, 2024
Verified
Dave Ryan is the owner and operator of Ryan's Arcade. At the end of its accounting period, December 31, Ryan's Arcade has assets of $450,000 and liabilities of $125,000. Using the accounting equation, determine the following amounts:
(a)owner's equity as of December 31 of the current year
(b)owner's equity as of December 31 at the end of the next year, assuming that assets increased by $65,000 and liabilities increased by $35,000 during the year
Owner's Equity
Represents the owner’s claims on the assets of a business, calculated as the business’s total assets minus its total liabilities.
Accounting Equation
The fundamental equation of double-entry bookkeeping, reflecting that assets equal liabilities plus owner's equity.
- Employ the accounting equation for the computation of total assets, liabilities, and owner's equity sums.
- Ascertain the net earnings or shortfall through evaluating alterations in ownership interest and withdrawals.
Verified Answer
JO
Jasmine OrranteMay 29, 2024
Final Answer :
(a)$325,000 ($450,000 ? $125,000)
(b)$355,000 [ ($450,000 + $65,000) ? ($125,000 + $35,000)]
(b)$355,000 [ ($450,000 + $65,000) ? ($125,000 + $35,000)]
Learning Objectives
- Employ the accounting equation for the computation of total assets, liabilities, and owner's equity sums.
- Ascertain the net earnings or shortfall through evaluating alterations in ownership interest and withdrawals.