Basic accounting equation (Learning Objective 5 ) 10–15 min.

Mountain Drycleaners had $91,000 of total assets and $7,000 of total stockholders’

equity at December 31, 2014. At December 31, 2015, Mountain Drycleaners had assets totaling $145,000 and stockholders’ equity totaling $73,000.

After analyzing the data, answer the following questions:

1. What was the amount of the increase or decrease in liabilities?

2. Identify a possible reason for the change in liabilities during the year.

AppendixLO1