00:01
At the beginning of the year, carla vista company had total assets of 897 ,000, total liabilities of 515 ,000, and you haven't been told the amount of equity.
00:15
What you're referencing here is the accounting equation, which is assets equals liabilities plus equity.
00:22
First, you need to find that missing equity amount, and that's the difference between your total assets and the amount of liabilities, which it told you.
00:32
$397 ,000 minus $515 ,000 tells me that my beginning equity here is $382 ,000.
00:42
Now, your first question is, what happens if total assets increase $140 ,000 during the year, and total liabilities decrease $84 ,000? well, we have to remember the accounting equation has to stay balanced.
00:59
If the left side increased $140 ,000, then the right side has to increase.
01:03
$140 ,000 as well.
01:06
That would mean equity would need to increase $224 ,000 to cover the difference of liabilities dropping.
01:14
It's a net $140 ,000 addition on both sides.
01:19
That makes my new assets amount, $1 ,37 ,000.
01:26
It makes my new liabilities account, $431 ,000, and it makes my new equity account $606 ,000.
01:42
Let's look at your second question.
01:45
You said to treat all instances independently, which means we're not going to use our prior information.
01:50
We're going to start back where we began...