PE 1-2A Accounting equation

Megan Newell is the owner and operator of Ultima LLC, a motivational consulting business. At the end of its accounting period, December 31, 2013, Ultima has assets of $942,000 and liabilities of $584,000. Using the accounting equation, determine the following amounts:

a. Owner’s equity as of December 31, 2013.
b. Owner’s equity as of December 31, 2014, assuming that assets increased by $113,000 and liabilities increased by $44,000 during 2014.


Answer:

a. A = L + OE
$942,000 = $584,000 + OE
OE = $358,000
b. A = L + OE
+$113,000 = +$44,000 + OE
OE =
OE on December 31, 2014 =
+$69,000
$427,000 = $358,000 + $69,000