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Determining Balances Using the Accounting Equation

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At the beginning of the year, Pear Corporation had total assets of $550,000 and total liabilities of $210,000. Answer the following questions viewing each situation as being independent of the others.

(1) If total assets increased $200,000 during the year, and total liabilities decreased $75,000, what is the amount of owner's equity at the end of the year?

(2) During the year, total liabilities increased $230,000 and owner's equity decreased $90,000. What is the amount of total assets at the end of the year?

(3) If total assets decreased $40,000 and owner's equity increased $130,000 during the year, what is the amount of total liabilities at the end of the year?

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Solution Preview

Please see the attached Word 97-2003 document.

At the beginning of the year, Pear Corporation had total assets of $550,000 and total liabilities of $210,000. Answer the following questions viewing each situation as being independent of the others.

(1) If total assets increased $200,000 during the year, and total liabilities decreased $75,000, what is the amount of owner's equity at the ...

Solution Summary

This solution illustrates how to determine year-end balances using the accounting equation.

$2.19