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    misro2003's Avatar
    misro2003 Posts: 1, Reputation: 1
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    #1

    Jan 13, 2011, 09:34 AM
    How do I figure out equity without liability? Only stocks, net income, and dividends?
    I am so confused with this accounting question, I understand that Assets = Liabilities + Equity, but how do you figure out Equity without the liability, only stocks, net income, and dividends? Here is the question...

    What is the amount of equity on December 31, 2009?

    FINANCIAL STATEMENT FOR COMPANY A
    December 31, 2009:
    Assets - 36,000
    Liabilities - ?
    During the year 2009:
    Stock Issuances - 6,000
    Net Income - 7.760
    Cash Dividends - 3,500
    solutionhelp's Avatar
    solutionhelp Posts: 1, Reputation: 1
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    #2

    Oct 23, 2011, 12:00 PM

    assets
    36,000$

    Liabilities + owners equity
    current liability
    25740$


    owner's equity
    capital stock 6000$
    retained earning 4260$
    10260$

    total 36000$


    as you know that the L.H.S must be equal to right hand side in an accounting equation.
    and that the net income is always reported in the retained earning account in balance sheet under owner's equity. So you less the net income by dividends i.e ( 7760-3500=4260) add that to the capital stock i.e( 6000 +4260=10260) now you have got assets you have got owners equity total and you subtract them both to get liability which is (25740)
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