In the first year, equity is not given. Therefore, we must calculate equity as a plug variable. Since total liabilities & equity is equal to total assets, equity can be calculated as: Owners’ equity = Total liab & equity – Long-term debt – Current liabilities Owners’ equity = $276,719 – 103,006 – 60,832 = $112,881
Balance sheet as of Dec. 31, 2011 Cash
$35,721
Accounts payable
$47,325
Accounts receivable
21,732
Notes payable
20,796
Inventory
43,381
Current liabilities
$68,121
Current assets
$100,834
Long-term debt
$116,334
Net fixed assets
$248,625
Owners' equity
$165,004
Total assets
$349,459
Total liab. & equity
$349,459
The owner’s equity for 2011 is the beginning of year owner’s equity, plus the addition to retained earnings, plus the new equity, so:
