At the Beginning of the Year, Diskman Company Had Total

question 103

Essay

At the beginning of the year, Diskman Company had total assets of $700,000 and total liabilities of $300,000.
Instructions
Answer the following questions viewing each situation as being independent of the others.
1. If total assets increased $250,000 during the year, and total liabilities decreased $100,000, what is the amount of owner's equity at the end of the year?
2. During the year, total liabilities increased $340,000 and owner's equity decreased $130,000. What is the amount of total assets at the end of the year?
3. If total assets decreased $60,000 and owner's equity increased $190,000 during the year, what is the amount of total liabilities at the end of the year?

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Definitions:

Beginning Inventory

The inventory on hand at the start of an accounting period, before any purchases or production have been added.

Desired Ending Inventory

The inventory level that a company aims to have at the end of a period to meet forecasted sales and to provide a buffer for uncertainties.

Accounts Payable

The amount of money a company owes to its suppliers or creditors for goods or services purchased on credit.

Budgeted Purchases

Projected expenditures for goods or services during the budget period, often used in planning an organization's operations.