Question

Accounting Equation Inspirational Inc. is a motivational consulting business. At the end of its accounting period, October 31, 2017, Inspirational has assets of $5,250,000 and liabilities of $1,600,000. Using the accounting equation and considering each case independently, determine the following amounts: a. Stockholders' equity as of October 31, 2017. $ b. Stockholders’ equity as of October 31, 2018, assuming that assets increased by $800,000 and liabilities increased by $330,000 during 2018. $ c. Stockholders' equity as of October 31, 2018, assuming that assets decreased by $600,000 and liabilities increased by $140,000 during 2018. $ d. Stockholders' equity as of October 31, 2018, assuming that assets increased by $440,000 and liabilities decreased by $90,000 during 2018. $ e. Net income (or net loss) during 2018, assuming that as of October 31, 2018, assets were $6,140,000, liabilities were $1,950,000, and no additional common stock was issued or dividends paid. Net income $

Answer 1

Req A:
Assets as on Oct 2017: $ 5250,000
Liabilities on Oct 2017: $ 1600,000
Stockholder' equity: Assets-Liabilities
		($ 5250,000 -1600,000)= $3650,000
Req b:
Revised assets on Oct2018: $ 6050,000 (5250,000+800,000)
Revised liabilities on Oct 2018: 1930,000 (1600,000+330,000)
Stockholder' equity on Oct 2018: 6050,000 -1930,000 = $4120,000
Req C:
Revsied assets on Oct 2018: 4650,000 (5250,000-600,000)
Revised liabilities on Oct 2018: 1740,000 (1600,000+140,000)
Stockholder' equity: 4650,000 -1740,000 = $ 2910,000
Req d:
Revised assets on Oct 2018: 5690,000 (5250,000+440,000)
Revised liabilities on Oct 2018: 1510,000 (1600,000-90,000)
Stockholdere' equity: 5690,000 -1510,000 = $ 4180,000
Req E:
Revised Assets on Oct 2018: 6140,000
Revised liabilities on Oct 2018: 1950,000
Stockholder' equity: 6140,000-1950,000 = $ 4190,000
Equity on 2018			4190000
Less:Equity on 2017			3650000
Net Income			540000