E1-23 Bob Auto Repairs, Inc.

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 E1-23 Using the accounting equation and evaluating business performance[10 min]

Bob Auto Repairs, Inc., started 2012 with total assets of $19,000 and total liabilities
of $9,000. At the end of 2012, Bob’s total assets stood at $27,000, and total liabilities
were $13,000.

Requirements

1. Did the stockholders’ equity of Bob Auto Repairs, Inc. increase or decrease during
2012? By how much?

2. Identify two possible reasons for the change in stockholders’ equity during the year.