   Chapter 1, Problem 3E

Chapter
Section
Textbook Problem

Dr. L. M. Patton is an ophthalmologist. As of December 31, Dr. Patton owned the following property that related to his professional practice, Patton Eye Clinic:Cash, $2,995Professional Equipment,$63,000Office Equipment, $8,450On the same date, he owed the following business creditors:Munez Supply Company,$3,816Martin Equipment Sales, $3,728Compute the following amounts in the accounting equation:Assets$______ = Liabilities $______ + Owner’s Equity$______

To determine

Ascertain the values of assets, liabilities, and owners’ equity from the given information, using accounting equation.

Explanation

Accounting equation: Accounting equation is a concept expressed in the form of equation, which creates a relation between resources or assets of a company and claims of resources to creditors and owners. Fundamental accounting equation is expressed as shown below:

Assets = Liabilities + Owners' Equity

Ascertain the values of assets, liabilities, and owners’ equity from the given information, using accounting equation.

Step 1: Compute the amount of total assets.

 Details Amount ($) Cash$2,995 Professional equipment 63,000 Office equipment 8,450 Total assets \$74,445

Table (1)

Step 2: Compute the amount of total liabilities

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