At the beginning of the year, Swifty Company had total assets of $862,000 and total liabilities...

At the beginning of the year, Swifty Company had total assets of $862,000 and total liabilities of $600,000. Answer the following questions.

(a) If total assets increased $137,000 during the year and total liabilities decreased $70,000, what is the amount of stockholders’ equity at the end of the year?

(b) During the year, total liabilities increased $120,000 and stockholders’ equity decreased $84,000. What is the amount of total assets at the end of the year?
(c) If total assets decreased $77,000 and stockholders’ equity increased $101,000 during the year, what is the amount of total liabilities at the end of the year?

Expert Solution

Stockholder's Equity at the beginning of the year = Total assets at the beginning of the year - Total liabilities at the beginning of the year

= $862000 - $600000

= $262,000

(a) Stockholders’ equity at the end of the year = (Total assets at the beginning of the year + Increase in assets during the year) - (Total liabilities at the beginning of the year - Decrease in liabilities during the year)

= ($862000 + $137000) - ($600000 - $70000)

= $469000

(b) Total assets at the end of the year = (Stockholder's Equity at the beginning of the year - Decrease in stockholder's equity) + (Total liabilities at the beginning of the year + Increase in liabilities during the year)

= ($262000 - $84000) + ($600000 + $120000)

= $898000

(c) Total liabilities at the end of the year = (Total assets at the beginning of the year - Decrease in assets during the year) - (Stockholder's Equity at the beginning of the year + Increase in stockholder's equity)

= ($862000 - $77000) - ($262000 + $101000)

= $422000

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