Question

Learning Objective: Calculate the total assets, liabilities, or equity from given information.

Consider the following information:

Accounts Payable: $4,000
Notes Payable: $10,000
Salaries payable: $1,000
Revenues: $5,000
Accounts Receivable: $5,000
Utilities Expense: $2,000
Cash: $5,000
Office Supplies: $1,000
Equipment: $20,000
Accumulated Depreciation Equipment: $5,000
Unearned Revenue: $2,000
Equity: $22,000
Salaries Expense: $1,000

From the above set of data, what is the total for assets, liabilities, and equity?

a) Total Assets: $26,000

   Total Liabilities: $17,000

Total Equity: $9,000

b) Total Assets: $29,000

   Total Liabilities: $14,000

Total Equity: $9,000

c) Total Assets: $29,000

   Total Liabilities: $12,000

Total Equity: $9,000

d) Total Assets: $36,000

   Total Liabilities: $14,000

Total Equity: $9,000

Can you also please explain why this is the correct answer? I'm struggling to understand this part of this class and when I get an answer wrong, they give no explanation as to why.

Thank you.

Answer 1

Given Information,

1. Accounts Payable: $4,000=Liability Item
2. Notes Payable: $10,000=Liability Item
3. Salaries payable: $1,000=Liability Item
4. Revenues: $5,000=Item of Income statement
5. Accounts Receivable: $5,000
6. Utilities Expense: $2,000=Item of Income statement
7. Cash: $5,000=Asset Item
8. Office Supplies: $1,000=Asset Item
9. Equipment: $20,000=Asset Item
10. Accumulated Depreciation Equipment: $5,000=To be deducted from Equipment
11. Unearned Revenue: $2,000=Liability Item
12. Equity: $22,000
13. Salaries Expense: $1,000=Item of Income statement

Answer :Option a is the correct answer i.e Total asset =$26,000 ,Total Liabilities=$17,000 & Equity =$ 9000 which can be explained as under;

Clasification of above items of Balance sheet into Asset Item or Liabilities Item

Particulars	Liability Item	Asset Item
Accounts Payable	$4,000
Notes Payable	$10,000
Salaries payable	$1,000
Accounts Receivable		$5,000
Cash		$5,000
Office Supplies		$1,000
Equipment less Accumulated Depreciation Equipment ($20,000-$5,000)		$15,000
Unearned Revenue	$2,000
Total	$17,000	$26,000

Hence, Total Assets=$26,000 & Total Liabilities=$17,000

( Note : In this question, full information regarding Equity is not given & hence Equity is derived by this following equation/formula)

Total Assets= Total Liabilities + Equity

$26,000=$17,000+ Equity

Equity= $26,000 - $17,000

Equity=$ 9000

Hence Total asset =$26,000 ,Total Liabilities=$17,000 & Equity =$ 9000

Hence,Option a is the correct answer.

Please feel free to reach or comment back if you need further clarity/explanation or something is missing.I will be glad to resolve your querries