Answer:
Gordon's stockholders' equity increased by $95,000.
Explanation:
The accounting equation shows the relationship between the three classes of items in the balance sheet namely;assets, liabilities and equity
The relationship is given as;
Assets = liabilities + equity
Let the total assets at the start of the year be a, total liabilities b and total equity be c at the start of the year. As such, at the beginning of the year,
a = b + c,
c = a - b
If during the year, total assets increased by $60,000 and its liabilities decreased by $35,000, then;
a + 60000 = b - 35000 + c
c = a - b + 60000 + 35000
c = a - b + 95000
From the equation above, Gordon's stockholders' equity increased by $95,000.
