For company A:


b. What is the amount of equity on December 31, 2011?
c. What is the amount of liabilities on December 31, 2011?



December 31, 2010 Company A
Assets $45,000
Liabilities $23,500
December 31, 2011
Assets $48,000
Liabilities ?
During year 2011
Stock Issuances $5,000
Net Income $7,500
Cash Dividends $2,500


I am having trouble figuring out how to find the liabilities and the equity for December 31, 2011 in this problem. I know that I can use the Accounting Equation, but it appears that there is not enough information. My textbook shows that the amount of equity is $31,500 as a check but I'm clueless on how that answer was reached. Can you please explain this?

December 31, 2010 Company A
Assets $45,000
Liabilities $23,500
Equity $21500
December 31, 2011
Assets $48,000
Liabilities ?
During year 2011
Stock Issuances $5,000
Net Income $7,500
Cash Dividends $2,500

equity 21500 +5000+7500-2500 =31500

Accounting requires you think about the information you have been given

assets=liabi;itis+owner equity
____ =20000 +5000
30000=15000+_____