For Tania08:
At the beginning of the year, Quasar Company's liabilities equal $51,000. During the year, assets increase by $60,000, and at year-end assets equal $190,000. Liabilities decrease $12,000 during the year. What are the beginning and ending amounts of equity?

- JamesJ

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- anonymous

I'm here now.

- JamesJ

Again, start with
Assets = Liabilities + Equity
BOY* _________ $51,000 _________
Change $60,000 ($12,000) _________
EOY** $190,000 _________ _________
*BOY = Beginning of Year
**EOY = End of Year
Now, fill in the gaps in this table.

- anonymous

I'm lost. :/

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## More answers

- JamesJ

Assets = Liabilities + Equity.
Agreed on that?

- anonymous

Yes, I get that part.

- JamesJ

Good. Next, you're given four pieces of information:
- liabilities at beginning of year: $51,000
- change in assets during year: $60,000
- assets at end of year: $190,000
- change in liabilities during year: ($12,000) .... where as usual ( ) around a number means negative
So what I've done is create a table to show that information. That's what this is:
Assets = Liabilities + Equity
BOY* _________ $51,000 _________
Change $60,000 ($12,000) _________
EOY** $190,000 _________ _________

- JamesJ

talk to me ... tell me what's working and what's not

- JamesJ

talk to me or I'm out of here.

- anonymous

Ok umm

- JamesJ

So given this information:
Assets = Liabilities + Equity
BOY* _________ $51,000 _________
Change $60,000 ($12,000) _________
EOY** $190,000 _________ _________
What are the assets at the beginning of the year, BOY?

- JamesJ

You know what the assets are at the end of the year (EOY), and you know how much they changed. Hence what were they at the BOY?

- JamesJ

Let X = assets at the beginning of the year.
X + $60,000 = $190,000
Hence what is X?

- JamesJ

X must be $130,000. If you end the year with $190,000 of assets, and during the year the assets changed by $60,000, it must be that we started the year with $130,000 of assets.
Hence our table now looks like this:
Assets = Liabilities + Equity
BOY* $130,000 $51,000 _________
Change $60,000 ($12,000) _________
EOY** $190,000 _________ _________
Now, given that, you can calculate the equity at the beginning of the year, one of the two things the question originally asked you for.
In fact, you should really have no trouble filling in every blank in this table.

- anonymous

Can you just tell me what I have to add and subtract?

- JamesJ

Well, Assets = Liabilities + Equity
Hence what is Equity on this line:
Assets = Liabilities + Equity
BOY* $130,000 $51,000 _________

- anonymous

I need two answers though.

- JamesJ

I know ... and this is how you get there.

- JamesJ

Figure out how to complete the table. Think it through and be logical. Complete each row in turn. It's really not hard to figure out what to subtract and what to add.

- JamesJ

For example, with the first row, we have
Assets = Liabilities + Equity
BOY* $130,000 = $51,000 + ______
What value of Equity makes sense here?

- anonymous

Is the answer of equity $79.000?

- anonymous

How did you get that?

- anonymous

Sorry, I´ve answered just the inicital equity. It follows the right answers: initial equity = 79.000,00 and the final equity = 127.000,00. You have the following data: initial liabiliaties (IL), the asset´s variation (VA), the final asset (FA) and the liabilities variation (VL). So, Initial asset (IA)= FA - VA = 190.000-60.000 = 130.000. Inital equity = IA- IL = 130.000-51.000 = 79.000. Using the same reasoning, you will get the final equity, because the final liabilities (FL) = IL+VL = 51000+12000 = 63.000. The final equity = FA-FL = 190.0000-63.000 = 127.000. Did you realize that the equity´s variation is equal to asset´s variation minus liabilities variation, i.e, 48.000? You got?

- anonymous

SO its 127000?

- anonymous

There was two questions: the value of equity at the beggining and at the end. At the beggining the answer is 79.000, and at the end the answer is 127.000.

- anonymous

127000 is wrong. =/

- anonymous

Ok. The problem was that the liabilities " decreased"...

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