Question

A company's balance sheet shows: cash $40,000, accounts receivable $25,000, office equipment $59,000, and accounts payable $26,000. What is the amount of stockholders' equity

Answer 1

the amount of stockholders' equity is $98,000

Step-by-step explanation:

It is important to remember that the Balance Sheet uses the Accounting equation :

Accounting Equation states that :

Assets = Equity + Liabilities

This can be also stated as :

Equity = Assets - Liabilities

Where,

Assets = $40,000 + $25,000 + $59,000 = $124,000

Liabilities = $26,000

Therefore,

Equity = $124,000 - $26,000

= $98,000

Conclusion :

Using the Accounting Equation we have solved the amount of stockholders' equity as $98,000