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4 June, 07:34

Year 1: You (the owner) contributed $100,000 to the business. At the end of the year, your total assets are $150,000. Assuming that the only activity in addition to you contributing was taking out a bank loan, what are the Total Liabilities at the end of the year?

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  1. 4 June, 11:21
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    Total Liabilities at the end of the year are $50,000

    Explanation:

    Owner Contribution = Equity = $100,000

    Total Asset at the end of year = $150,000

    Bank Loan = liabilities = ?

    Using Accounting Equation

    Total Assets = Total Equity + Total Liabilities

    $150,000 = $100,000 + Total Liabilities

    Total Liabilities = $150,000 - $100,000

    Total Liabilities = $50,000

    So total Liabilities at the end of the year is $50,000.
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