Inspirational Inc. is a motivational consulting business. At the end of its accounting period, October 31, 20Y2,
Question:
Inspirational Inc. is a motivational consulting business. At the end of its accounting period, October 31, 20Y2, 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, 20Y2.
b. Stockholders’ equity as of October 31, 20Y3, assuming that assets increased by $800,000 and liabilities increased by $330,000 during 20Y3.
c. Stockholders’ equity as of October 31, 20Y3, assuming that assets decreased by $600,000 and liabilities increased by $140,000 during 20Y3.
d. Stockholders’ equity as of October 31, 20Y3, assuming that assets increased by $440,000 and liabilities decreased by $90,000 during 20Y3.
e. Net income (or net loss) during 20Y3, assuming that as of October 31, 20Y3, assets were $6,140,000, liabilities were $1,950,000, and no additional common stock was issued or dividends paid.
Common Stock Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
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The accounting equation is a formula that shows the sum of a company\\\'s liabilities and shareholders\\\' equity are equal to its total assets (Assets = Liabilities + Equity). The clear-cut relationship between a company\\\'s liabilities, assets, and equity is the backbone of double-entry bookkeeping.