Julio has put up a cash in the amount of $150,000 representing his initial capital. Out of 150,000cash, he acquired an equipment costing 100,000 which requires a cash out lay of 75,000 and incurs a liability of 25,000. How much is the owners equity at the end of the year?

The best way to solve this type of problem is to journalize your transactions.

Initial Investment:
Debit Cash for 150,000
Credit Julio Capital(owners equity account) for 150,000

Acquired Equipment:
Debit Equipment for 100,000
Credit Cash for 75,000
Credit Accounts Payable for 25,000


So, which transactions affect Owners Equity. There is only one transaction that affects Owners Equity and that transaction amount will be your answer.