Question

accounting equation
patrick miller is the owner and operator of chicopee llc, a motivational consulting business. at the end of its accounting period, december 31, 20y8, chicopee has assets of $518,000 and liabilities of $165,000. using the accounting equation, determine the following amounts:
a. owners equity as of december 31, 20y8.
$

b. owners equity as of december 31, 20y9, assuming that assets increased by $86,200 and liabilities increased by $25,000 during 20y9.
$

Explanation:

Step1: Recall accounting equation

$\text{Owner's Equity} = \text{Assets} - \text{Liabilities}$

Step2: Calculate 20Y8 owner's equity

$\$518,000 - \$165,000 = \$353,000$

Step3: Find 20Y9 total assets

$\$518,000 + \$86,200 = \$604,200$

Step4: Find 20Y9 total liabilities

$\$165,000 + \$25,000 = \$190,000$

Step5: Calculate 20Y9 owner's equity

$\$604,200 - \$190,000 = \$414,200$

Answer:

a. $\$353,000$
b. $\$414,200$