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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Brief Exercise 1-24 The Accounting Equation

Financial information for three independent cases is as follows:

  1. The liabilities of Dent Company are $82,000, and its stockholders' equity is $120,000. What is the amount of Dent’s total assets?
  2. The total assets of Wayne Inc. are $55,000, and its stockholders' equity is $22,500. What is the amount of Wayne’s total liabilities?
  3. Gordon Company’s total assets increased by $60,000 during the year, and its liabilities decreased by $35,000. Did Gordon’s stockholders' equity increase or decrease? By how much?

Required:

Determine the missing amount for each case.

To determine

Accounting equation:

Accounting equation represents the mathematical relationship between assets, liabilities and equity. According to this equation, assets are equal to the sum of liabilities and equity. The formal for basic accounting equation is as follows:

Assets = Liabilities + Equity

Requirement-a:

To Calculate:

The amount of Total Assets.

Explanation

The amount of Total Assets is calculated as follows:

Total As...

To determine

Accounting equation:

Accounting equation represents the mathematical relationship between assets, liabilities and equity. According to this equation, assets are equal to the sum of liabilities and equity. The formal for basic accounting equation is as follows:

Assets = Liabilities + Equity

Requirement-b:

To Calculate:

The amount of Total Liabilities.

To determine

Accounting equation:

Accounting equation represents the mathematical relationship between assets, liabilities and equity. According to this equation, assets are equal to the sum of liabilities and equity. The formal for basic accounting equation is as follows:

Assets = Liabilities + Equity

Requirement-c:

To Calculate:

The amount of increase or decrease in equity.

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