Question

At the beginning of the year, Bhavna Ltd had total assets of $720,000 and 4 points
total liabilities of $420,000. Use this information to answer each of the
following independent questions. (a) If Bhavna's total assets increased by
$250,000 during the year and total liabilities decreased by $80,000, what
is the amount of shareholders' equity at the end of the year? (b) During
the year. Bhavna's total liabilities decreased by $100,000. The company
reported net income of $90,000, sold additional shares for $125.000, and
did not declare any dividends during the year. What is the amount of total
assets at the end of the year? (c) If Bhavna's total assets decreased by
$90.000 during the year and shareholders' equity increased by $120,000,
what is the amount of total liabilities at the end of the year? *​

Answer 1

Answer:

Assets = Rs. 1,80,000; Net worth or Owner's Equity = ?; Outside Liability = Rs. 50,000

The accounting equation is:

Assets = Outside Liability + Owner's Equity or Net Worth

Rs. 1,80,000 = Rs. 50,000 + Owner's Equity or Net Worth

Owner's Equity or Net Worth = Rs. 1,80,000 - Rs. 50,000

Owner's Equity or Net Worth = Rs. 1,30,000