Total assets and total liabilities were $31,000 and $26,000 respectively at the beginning of the period. Assets increased by 20% and liabilities increased by 10% during the period. What is the owner's equity at the end of the period?
A)$8,600
B)$65,800
C)$290
D)$5,000

Question

Quizplus · Accepted Answer

At the beginning, owner's equity = Total assets - Total liabilities = $31,000 - $26,000 = $5,000. At the end, assets = $31,000 * 1.20 = $37,200, liabilities = $26,000 * 1.10 = $28,600. Thus, owner's equity at the end = Total assets - Total liabilities = $37,200 - $28,600 = $8,600.

Total Assets and Total Liabilities Were $31,000 and $26,000 Respectively