Accounting Equation Inspirational Inc. is a motivational consulting business. At

Question

Accounting Equation Inspirational Inc. is a motivational consulting business. At the end of its accounting period, October 31, 2017, Inspirational has assets of $5,250,000 and liabilities of $1,600,000. Using the accounting equation and considering each case independently, determine the following amounts: a. Stockholders' equity as of October 31, 2017. $ b. Stockholders’ equity as of October 31, 2018, assuming that assets increased by $800,000 and liabilities increased by $330,000 during 2018. $ c. Stockholders' equity as of October 31, 2018, assuming that assets decreased by $600,000 and liabilities increased by $140,000 during 2018. $ d. Stockholders' equity as of October 31, 2018, assuming that assets increased by $440,000 and liabilities decreased by $90,000 during 2018. $ e. Net income (or net loss) during 2018, assuming that as of October 31, 2018, assets were $6,140,000, liabilities were $1,950,000, and no additional common stock was issued or dividends paid. Net income $

Explanation / Answer

Req A: Assets as on Oct 2017: $ 5250,000 Liabilities on Oct 2017: $ 1600,000 Stockholder' equity: Assets-Liabilities ($ 5250,000 -1600,000)= $3650,000 Req b: Revised assets on Oct2018: $ 6050,000 (5250,000+800,000) Revised liabilities on Oct 2018: 1930,000 (1600,000+330,000) Stockholder' equity on Oct 2018: 6050,000 -1930,000 = $4120,000 Req C: Revsied assets on Oct 2018: 4650,000 (5250,000-600,000) Revised liabilities on Oct 2018: 1740,000 (1600,000+140,000) Stockholder' equity: 4650,000 -1740,000 = $ 2910,000 Req d: Revised assets on Oct 2018: 5690,000 (5250,000+440,000) Revised liabilities on Oct 2018: 1510,000 (1600,000-90,000) Stockholdere' equity: 5690,000 -1510,000 = $ 4180,000 Req E: Revised Assets on Oct 2018: 6140,000 Revised liabilities on Oct 2018: 1950,000 Stockholder' equity: 6140,000-1950,000 = $ 4190,000 Equity on 2018 4190000 Less:Equity on 2017 3650000 Net Income 540000

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