In its first year of business, Arlo's Dry Cleaners had a closing balance of - $1,500. The second year it lost an additional $1,200. What is the closing balance at the end of year two?

Question

Mathematics

Leblanc

24 May, 18:26

In its first year of business, Arlo's Dry Cleaners had a closing balance of - $1,500. The second year it lost an additional $1,200. What is the closing balance at the end of year two?

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Brooklynn Garrison · Answer 1

-2700 dollars

Step-by-step explanation:

The first year we have a loss of 1500 dollars. On the balance sheet we write - 1500, with the negative indicating loss. Some accounting practices will use parenthesis to mean loss, so you might see it as (1500). But in this problem, we'll use negative signs for loss.

The second year is loss of 1200. Add up the two losses (the positive versions of each) to get 1500+1200 = 2700. Then make the result negative. Taking one loss and adding more loss to it means your loss has gotten bigger. So that's why the closing balance at the end of year 2 is - 2700 dollars, which is a loss of 2700 dollars.