Katherine Brewer is the stockholder and operator of You're A Star LLC, a motivational consulting business

Accounting Aug 23, 2020

Katherine Brewer is the stockholder and operator of You're A Star LLC, a motivational consulting business. At the end of its accounting period, December 31, 20Y2, You're A Star has assets of $508,000 and liabilities of $122,000.

Using the accounting equation, determine the following amounts:

a. Stockholders' equity as of December 31, 20Y2.
b. Stockholders' equity as of December 31, 20Y3, assuming that assets decreased by $97,000 and liabilities decreased by $29,000 during 20Y3.

Expert Solution

a). Computation of the stockholders' equity as of December 31, 20Y2:-

Stockholders' equity = Assets - Liabilities

= $508,000 - $122,000

= $386,000

b). Computation of the stockholders' equity as of December 31, 20Y3:-

Stockholders' equity = Assets - Liabilities

= ($508,000 - $97,000) - ($122,000 - $29,000)

= $411,000 - $93,000

= $318,000

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