Question

The Caraway Seed Company grows heirloom tomatoes and sells their seeds. The heirloom tomato plants are preferred by many growers for their superior flavor. At the end of the most recent year, the firm had current assets of ​$50,800, net fixed assets of ​$251,000, current liabilities of ​$30,000, and​ long-term debt of ​$99,400. What is the firm's equity at the end of the year?

a) ​$21,400
b) ​$91,400
c) ​$120,400
d) ​$201,400

Answer 1

The equity of the Caraway Seed Company is calculated by subtracting total liabilities from total assets, resulting in an equity value of $172,400. However, this value does not match any of the provided answer choices.

Step-by-step explanation:

To calculate the equity of the Caraway Seed Company, we need to subtract the total liabilities from the total assets. Equity represents the residual interest in the assets of a company after deducting liabilities.

In this case, the firm's total assets are the sum of its current assets and its net fixed assets, which amount to

$50,800 + $251,000 = $301,800.

The total liabilities are the sum of current liabilities and long-term debt,

$30,000 + $99,400 = $129,400.

Therefore, the equity of the Caraway Seed Company is calculated as:

Total Assets - Total Liabilities = Equity
$301,800 - $129,400 = $172,400

Note that none of the provided options match this result, indicating a possible error in the question or the answer choices.