Is this question that difficult? No one wants to help me.
At the beginning of the year, Addison Company's assets are $273,000 and its equity is $204,750. During the year, assets increase $80,000 and liabilities increase $42,000. What is the equity at the end of the year?
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Now, Tania, the equation you want here is Assets-Liabilities =Equity
So I have to subtract, correct?
yes. so first you want to find L1, the liabilities from the first year
The company starts out with $204,750 equity, and then gains $80,000, but also loses $42,000. That's a net gain of $38,000, so the final equity is:
204,750 + 38,000 = $242,750
The original assets are not needed to solve.
How did you get $38,000?
That's +80,000 (assets) minus 42,000 (liabilities).