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5 June, 11:21

Be-The-One is a motivational consulting business. At the end of its accounting period, December 31, 2017, Be-The-One has assets of $395,000 and liabilities of $97,000.

Using the accounting equation, determine the following amounts:

a. Stockholders' equity as of December 31, 2017.

b. Stockholders' equity as of December 31, 2018, assuming that assets decreased by $65,000 and liabilities increased by $36,000 during 2018.

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  1. 5 June, 11:56
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    a. Stockholders' equity as of December 31, 2017: $298,000

    b. Stockholders' equity as of December 31, 2018: $197,000

    Explanation:

    Basing on accounting equation:

    Total asset = Liabilities + Owner's (or Stockholders') Equity

    Stockholders' Equity = Total asset - Liabilities

    a. On December 31, 2017, Be-The-One has assets of $395,000 and liabilities of $97,000.

    Stockholders' equity as of December 31, 2017 = $395,000 - $97,000 = $298,000

    b. On December 31, 2018

    Total asset = $395,000 - $65,000 = $330,000

    Liabilities = $97,000 + $36,000 = $133,000

    Stockholders' equity as of December 31, 2018 = $330,000 - $133,000 = $197,000
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