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    breese3's Avatar
    breese3 Posts: 3, Reputation: 1
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    #1

    Jan 14, 2013, 12:39 PM
    How to find equity
    Hey can anyone help me out with this question?

    What is the amount of equity on December 31, 2011?
    And the liabilities?

    Assets: 49,000
    Liabilities: ?

    During year 2011:
    Stock insurances: 6000
    Net income: 11,270
    Cash dividends: 3,500
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
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    #2

    Jan 14, 2013, 02:47 PM
    You need to start with net income and subtract out your cash divvidends, then add this amount to your stock insurances during the year. This equals your Owners Equity amount. Now subtract this amount from assets to get your liabilities amount.
    breese3's Avatar
    breese3 Posts: 3, Reputation: 1
    New Member
    		  
    #3

    Jan 14, 2013, 03:24 PM
    Yeah that's what I've been doing and for some reason, my online homework says that is the wrong answer so I don't know what to do :( It also gives me the assets and liabilities from the year 2010 too. Do I need to calculate that in there somewhere?
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
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    #4

    Jan 14, 2013, 06:57 PM
    Yes.
    First you need to find your Equity for 2010, which is 2010 Assets minus 2010 Liabilities. Then add this amount to your 2011 stock issuances plus 2011 net income minus 2011 cash dividends to get your 2011 Owners Equity. Then take your 2011 Assets minus 2011 Owners Equity to get your 2011 Liabilities.
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