Components of the accounting equation Required The following three requirements

Question

Components of the accounting equation Required
The following three requirements are independent of each other.
a. Craig's Cars has assets of $4,550 and net assets of $3,200. What is the amount of liabilities? What is the amount of claims?
b. Heavenly Bakery has liabilities of $4,800 and equity of $5,400. What is the amount of assets?
What is the amount of net assets?
c. Bell's Candy Co. has assets of $49,200 and liabilities of $28,200. What is the amount of equity? What is the amount of net assets?

Explanation / Answer

All of these can be answered by the accounting equation: Assets = Liabilities + Owners equity. 1) assets =4550, liabilities = x, owners equity(net assets) =3200 set up the equation 4550 = x+3200 4550-3200 = x x = 1350 = liabilities, which are claims against the assets. So 1350 answers both questions. b) assets = x, liabilities = 4800, equity = 5400 Set up the equation x=4800 + 5400 x = 10,200 = total assets. c) assets = 49,200, liabilities = 28,200, equity = x Set up the equation 49,200 =28,200 + X x= 49,200 - 28200 x= 21,000 = equity.

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