On January 1,2010,Yukon Inc.,had assets of $156,000 and shareholders's equity of $88,000.During the year assets increased by $35,000 and shareholders's equity decreased by $27,500.What were the liabilities on December 31,2011?

Question

Quizplus · Accepted Answer

We can use the accounting equation: 
Assets = Liabilities + Shareholders' Equity

Starting with the information given on January 1, 2010: 
$156,000 = Liabilities + $88,000 
Liabilities = $68,000

At the end of the year: 
$191,000 = Liabilities + $60,500 ($88,000 - $27,500 + $35,000) 
Liabilities = $130,500

Therefore, the answer is C) $130,500.