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. $ 3,650,000 b. Stockholders’ equity as of October 31, 20Y3, assuming that assets increased by $800,000 and liabilities increased by $330,000 during 20Y3. $ 4,120,000 c. Stockholders' equity as of October 31, 20Y3, assuming that assets decreased by $600,000 and liabilities increased by $140,000 during 20Y3. $ 2,910,000 d. Stockholders' equity as of October 31, 20Y3, assuming that assets increased by $440,000 and liabilities decreased by $90,000 during 20Y3. $ 4,180,000 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. Net income $

a.Stockholders equity as at October 31, 20Y2.

       Equity = $3,650,000

b. Stockholders equity as at October 31, 20Y3

        Equity = $4,120,000

c. Stockholders equity as at October 31, 20Y3.

     Equity = $2,910,000

d.Stockholders equity as at October 31, 20Y3.

      Equity = $4,180,000

e. Net Income as at October 2OY3

         Net Income = $540,000

Explanation:

Accounting equation equate asset with liabilities and equity:

Assets = Liaibilities + Equity.

With this formula, any of the missing value can be derived mathematically.

To get equity, the item will be rearranged as follows:

Equity = Asset - Liabilities

a. Stockholders equity as at October 31, 20Y2.

Equity = $5,250,000   - $1,600,000

Equity = $3,650,000

b. Stockholders equity as at October 31, 20Y3

Increase in asset of $800,000 and increase in liabilities of $330,000

Equity = ($5,250,000 +$800,000) - ($1,600,000 + $330,000)

Equity = $6,050,000  - $1,930,000

Equity = $4,120,000

c. Stockholders equity as at October 31, 20Y3.

Assuming that assets decreased by $600,000 and liabilities increased by $140,000

Equity =( $5,250,000 - $600,000)  - ($1,600,000 + $140,000)

Equity = $4,650,000 - $1,740,000

Equity = $2,910,000

d. Stockholders equity as at October 31, 20Y3.

assuming that assets increased by $440,000 and liabilities decreased by $90,000

Equity = ($5,250,000+$440,000)  - ($1,600,000 -$90,000)

Equity = $5,690,000 - $1,510,000

Equity = $4,180,000

e. Net Income as at October 2OY3

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

Net income = Closing equity  - opening equity.

Closing equity:

                     = $6,140,000 - $1,950,000

                      = $4,190,000

Opening equity as at October 31, 20Y2 = $3,650,000

Net Income = $4,190,000 -$3,650,000

Net Income = $540,000

rational decision making is a multi-step process for making choices between alternatives. the process of rational decision making favors logic, objectivity, and analysis over subjectivity and insight. the word “rational” in this context does not mean sane or clear-headed as it does in the colloquial sense.

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