I don't understand what the stock and net income or dividence have to do with the equity and liability or at least I don't know th formula I need to find my asnwers I could only find the first questions because I know that assets - liabilities = equity but the next questions is where I'm stuck
I've tried stock+netincom-dividence but the number it gives me is to low to be the equity
December 31, 2010

Assets $ 45,000
Liabilities 23,500
December 31, 2011

Assets 48,000
Liabilities ?
During year 2011

Stock issuances 5,000
Net income (loss) 7,500
Cash dividends 2,500
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What is the amount of equity on December 31, 2010?
Amount of equity $ 21500

What is the amount of equity on December 31, 2011?
Amount of equity $

What is the amount of liabilities on December 31, 2011?
Amount of liabilities $

The first question you can answer right away is how much equity do you have at Dec 31, 2011. For this simply take Assets at Dec 31, 2011 minus Liabilities at Dec 31, 2011.

The second part where the problem only gives assets, I assume this is your Dec 31, 2010 or Jan 1, 2011 amount.

Since you know what the equity is at Dec 31, 2011 and with the income and dividends information given for the year, you will have to back into the equity amount for Dec 31, 2010. Since Equity =Stock + Net Income - Dividends. You know the ending equity amount so you have to calculate the beginning equity amount.

So take your equity at Dec 31, 2011 minus your stock issuance during the year minus your net income for the year and add your cash dividends during the year to get equity at Dec 31, 2010.

Now you can get your liabilities at Dec 31, 2010 by taking your assets at Dec 31, 2010 minus your equity at Dec 31, 2010.

Sorry I put spaces in the wrong place so I think you didn't see the problem correctly what I'm missing is the liability for 2011 the info for 2010 is useless when looking for the 2011 liability

December 31, 2011
Assets 48,000
Liabilities ?
During year 2011
Stock issuances 5,000
Net income (loss) 7,500
Cash dividends 2,500

Quote:

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Originally Posted by pready

The first question you can answer right away is how much equity do you have at Dec 31, 2011. For this simply take Assets at Dec 31, 2011 minus Liabilities at Dec 31, 2011.

The second part where the problem only gives assets, I assume this is your Dec 31, 2010 or Jan 1, 2011 amount.

Since you know what the equity is at Dec 31, 2011 and with the income and dividends information given for the year, you will have to back into the equity amount for Dec 31, 2010. Since Equity =Stock + Net Income - Dividends. You know the ending equity amount so you have to calculate the beginning equity amount.

So take your equity at Dec 31, 2011 minus your stock issuance during the year minus your net income for the year and add your cash dividends during the year to get equity at Dec 31, 2010.

Now you can get your liabilities at Dec 31, 2010 by taking your assets at Dec 31, 2010 minus your equity at Dec 31, 2010.

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Sorry I put spaces in the wrong place so I think you didn't see the problem correctly what I'm missing is the liability for 2011 the info for 2010 is useless when looking for the 2011 liability

December 31, 2011
Assets 48,000
Liabilities ?
During year 2011
Stock issuances 5,000
Net income (loss) 7,500
Cash dividends 2,500

Since you know your equity at Dec 31, 2010 simply add your stock issuances during the year and net income during the year and subtract your dividends during the year from your 2010 equity to get your Dec 31, 2011 euity amount,then take your assets at Dec 31,2011 and subtract out your equity at Dec 31, 2011 to get your Dec 31, 2011 liabilities.