Sawaddee Enterprises began the year with total assets of $450,000 and total liabilities of $230,000.If Sawaddee's total assets increased by $80,000 and its total liabilities increased by $57,000 during the year,what is the amount of Sawaddee's owners' equity at the end of the year?
A)$197,000
B)$543,000
C)$243,000
D)$220,000

Question

Quizplus · Accepted Answer

We can use the accounting equation to solve this problem:

Assets = Liabilities + Owners' Equity

At the beginning of the year: 
$450,000 = $230,000 + Owners' Equity

Owners' Equity = $220,000

At the end of the year: 
Assets = $450,000 + $80,000 = $530,000 
Liabilities = $230,000 + $57,000 = $287,000

Using the accounting equation again: 
$530,000 = $287,000 + Owners' Equity

Owners' Equity = $530,000 - $287,000 = $243,000

Therefore, the amount of Sawaddee's owners' equity at the end of the year is $243,000.

Sawaddee Enterprises Began the Year with Total Assets of $450,000