Using the accounting equation, answer each of the following independent questions.
2. Chapman Inc. doubles the amount of assets from the beginning to the end of the year. Liabilities at the end of the year amount to $40,000 and owners' equity is $20,000. What is the amount of Chapman's assets at the beginning of the year?
3. During the year, the liabilities of Dixon Enterprise triple in amount. Assets at the beginning of the year amount to $30,000, and owners' equity is $10,000. What is the amount of liabilities at the end of the year?
The accounting equation is Assets=Liabilities + Equity, A=L+E
The company starts with $100,000 in equity, so A=$100,000
The company starts with $80,000 in liabilities, so L=$80,000
So, at the beginning of the year, $100,000=$80,000+E; so E=$20,000
If net income is ...
The solution calculates the owner's equity and other accounting values for different companies using several financial details from the previous year.