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Calculate the balance of the Owners' equity account.

Bank = $2,000; Accounts Receivable = $13,000; Motor Vehicles = $27,000; Accounts Payable = $9,000; Bank Loan = $12,000; Owners' equity = ?

a) $1,000
b) $3,000
c) $6,000
d) $9,000

1 Answer

5 votes

Final answer:

The balance of the Owners' Equity account is calculated by subtracting total liabilities from the total assets. Given the provided figures, the equity is calculated as $42,000 in assets minus $21,000 in liabilities, resulting in $21,000 for Owners' Equity. The answer does not match any of the provided options, indicating a potential error in the question or options.

Step-by-step explanation:

To calculate the owners' equity of the business, we need to use the accounting equation which states that Assets = Liabilities + Owners' Equity. From the information given, we can summarize the assets and liabilities as follows:

  • Assets: Bank = $2,000; Accounts Receivable = $13,000; Motor Vehicles = $27,000; Total Assets = $2,000 + $13,000 + $27,000 = $42,000
  • Liabilities: Accounts Payable = $9,000; Bank Loan = $12,000; Total Liabilities = $9,000 + $12,000 = $21,000

To find the owners' equity, we subtract the total liabilities from the total assets:

Total Assets - Total Liabilities = Owners' Equity

$42,000 - $21,000 = $21,000

Therefore, the balance of the Owners' Equity account is $21,000. However, this answer is not listed in the provided options (a) $1,000 (b) $3,000 (c) $6,000 (d) $9,000, which implies there might be a mistake or misunderstanding in the question or the supplied options.

User Fred Medlin
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