6 Learning Outcome 3 You must show your calculations and ans

6. (Learning Outcome 3) You must show your calculations and answer both A) and B) correctly to receive full credit for this question In 2017, Benford Tool Co. reported total assets as $15,750. ando liabilities as $8,560 A) Use the accounting equation to solve for the amount of equity in 2017 B) If in 2018, the company assets increase by $3,000 and the equity decreases by $1,950, what will be the amount reported for liabilities in 2018? (Points: 6)

Solution

Answers

Total Assets = Total Liabilities + Equities

$ 15,750 = $ 8,560 + Equities
15750 = 8560 + Equities
15750 – 8560 = Equities
7190 = Equities.

Hence, Amount of Equity in 2017 = $ 7,190

Total Assets

Total Equities

Beginning balances

$            15,750.00

$                                           7,190.00 [calculated in ‘A’]

Increase / (Decrease) during 2018

$              3,000.00

$                                         (1,950.00)

Ending balance in 2018

$            18,750.00

$                                           5,240.00

Total Assets = Total Liabilities + Equities

$ 18,750 = Total Liabilities + $ 5,240
$ 18,750 - $ 5,240 = Total Liabilities
18750 – 5240 = Total Liabilities for 2018 Ending

Total Liabilities to be reported in 2018 = 18750 – 5240 = $ 13,510

	Total Assets	Total Equities
Beginning balances	$            15,750.00	$                                           7,190.00 [calculated in ‘A’]
Increase / (Decrease) during 2018	$              3,000.00	$                                         (1,950.00)
Ending balance in 2018	$            18,750.00	$                                           5,240.00