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-   -   How to find liability and equity with only assets (https://www.askmehelpdesk.com/showthread.php?t=544689)

  • Jan 16, 2011, 03:25 PM
    amb0914
    How to find liability and equity with only assets
    12/31/08
    Assets: 90,090
    Liability:?
    Equity?

    12/31/09
    Assets:99360
    Liability:78494
    Equity: 20866

    During 2009
    Stock Issuance: 6500
    Net Income: 7348
    Cash Dividends: 11,000

  • Jan 20, 2011, 08:18 AM
    meLay0828
    Issuance of stock and having a net income increase your equity and cash dividends deducts your equity. To find the amount of the equity and liability for 12/31/08 you have to solve backwards.

    Solve first for the beginning balance of the equity in 2009.

    Equity, 12/31/09 20,866
    Less: Stock Issuance 6,500
    Net Income 7,348
    Add: Cash Dividends 11,000
    Equity, 1/01/09 18,018

    The beginning balance of the equity during 2009 is the ending balance during 2008. Basic accounting equation states that total assets equals total liabilities plus equity. In the problem you have to squeeze the formula to get the amount of the total liabilities.

    Liability 12/31/08 72,072

    .. hope it helped. :)

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