Question

Chevelle, inc., is obligated to pay its creditors $7,800 during the year. 1.what is the value of the shareholders' equity if assets equal $9,300

Answer 1

Shareholder's equity is derived by taking the difference of Total Asset and Total Liability. In case if Total liability is more than total asset, then shareholder's equity is 0. In this case Total asset is $9300 and total liability is $7800. Hence, shareholder's equity is the difference of total asset and total liability which is $(9300-7800) which gives the answer as $1500. Hence shareholder's equity is $1500.