Use the following information as of december 31 to determine equity.

Use the following information as of December 31 to determine equity.
  Liabilities $ 142,000
  Cash 57,100
  Equipment 207,000
  Buildings 176,000

$142,000

$440,100

$57,100

$298,100

$582,100

Answer

General guidance

Concepts and reason
Financial statements: Financial statements presents summary of business operations. They include balance sheet, Income statement, Cash flow statement, and note to financial statements.

Fundamentals

Asset: An asset is something which has economic value to the entity. Based on its life they are classified as fixed and current assets. Fixed assets are further classified into tangible fixed assets and intangible fixed assets.

Liability: Liability represents a claim on assets of the business by the outsiders. They are generally creditors of the business. Liabilities can be long-term liabilities and short-term liabilities.

Equity: Equity represents residuary ownership in the assets of the business. Equity shareholders are real owners of the business and they take profits and bear losses of the business. Equity balance can be calculated using the below formula:

Equity = Assets - Liabilities

Step-by-step

Step 1 of 2

Total asset is:

Total assets =Cash + Equipment + Buildings
= $57,100+$207,000+ $176,000
= $440,100

Thus, total assets value is $440,100

Total assets value is total of cash, equipment, and buildings values given because cash, equipment, and buildings are assets. Total assets value then is $440,100.

Step 2 of 2

Equity balance is:

Equity = Assets - Liabilities
= $440,100-$142,000
= $298, 100

Thus, equity balance as of December 31 is $298,100

Equity balance as of December 31 is $298,100.


Equity balance is equal to assets balance less liabilities. Total assets as calculated in Step (1) is $440,100. Liabilities as given is $142,000. Then, equity balance is $298,100.

Answer

Equity balance as of December 31 is $298,100.

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