Question

BE1.2 (LO 3) Given the accounting equation, answer each of the following questions. a. The liabilities of Shumway Ltd. are £120,000 and the equity is £232,000. What is the amount of Shumway Ltd.'s total assets? b. The total assets of Shumway Ltd. are £190,000 and its equity is £80,000. What is the amount of its total liabilities? Use basic accoun​

Answer 1

the amount of Shumway Ltd.'s total liabilities is £110,000.

Explanation:

The accounting equation is:

Assets = Liabilities + Equity

a. We know that the liabilities of Shumway Ltd. are £120,000 and the equity is £232,000. We can use the accounting equation to find the amount of Shumway Ltd.'s total assets as follows:

Assets = Liabilities + Equity

Assets = £120,000 + £232,000

Assets = £352,000

Therefore, the amount of Shumway Ltd.'s total assets is £352,000.

b. We know that the total assets of Shumway Ltd. are £190,000 and its equity is £80,000. We can use the accounting equation to find the amount of its total liabilities as follows:

Assets = Liabilities + Equity

£190,000 = Liabilities + £80,000

Subtracting £80,000 from both sides, we get:

Liabilities = £190,000 - £80,000

Liabilities = £110,000

Therefore, the amount of Shumway Ltd.'s total liabilities is £110,000.