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13 February, 08:36

Accounting Equation Jan Petri is the stockholder and operator of Way to Go LLC, a motivational consulting business. At the end of its accounting period, December 31, 20Y2, Way to Go has assets of $798,000 and liabilities of $192,000. Using the accounting equation, determine the following amounts:

a. Stockholders' equity as of December 31, 20Y2. $

b. Stockholders' equity as of December 31, 20Y3, assuming that assets decreased by $152,000 and liabilities decreased by $46,000 during 20Y3. $

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  1. 13 February, 10:39
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    a. $606,000

    b. $500,000

    Explanation:

    As we know that

    Accounting equation is

    Total assets = Total stockholder equity + Total liabilities

    a. The total stockholder equity is

    = Total assets - total liabilities

    = $798,000 - $192,000

    = $606,000

    b. Now in case of decrease in assets and liabilities, the total stockholder equity is

    = Total assets - total liabilities

    = ($798,000 - $152,000) - ($192,000 - $46,000)

    = $646,000 - $146,000

    = $500,000
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