Question

3. At the beginning of the year, Cora Station had liabilities of P100,000 and owner’s equity of P96,000. If assets increased by P40,000 and liabilities decreased by P30,000. What was the owner’s equity at the end of the year?

Answer 1

Explanation:

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Answer 2

Given:

liabilities = p100,000

owners qequity = p96,000

increased assets = p40,000

decreased liability = p30,000

To find:

Have to find owner's equity at the end of the year

Solution:

We all know that,  liability + equity = assets  

therefore, p100000 + p96000 = p196000

if assets increased by p40000, then assets will be (p196000 + p40000) = p236000

& liability decreased by p30000, then liability will be = ( p100000 - p30000) = p70000

 

So, according to formula, after changing of assets & liability , owner's equity will be = ( p70000 + equity = p236000 ) where liability = p70000 and assets = p236000

therefore, equity = p236000 - p70000 = p166000

So, the final answer is p166000.