Final answer:
The recorded value of Equipment on Hercules Manufacturing, Incorporated's accounting records as of December 31, Year 1, is $58,000. This is determined by using the accounting equation to sum up the liabilities and shareholders' equity and subtracting the known asset values from this total.
Step-by-step explanation:
Finding the Recorded Value of Equipment
To determine the recorded value of Equipment on Hercules Manufacturing, Incorporated's balance sheet as of December 31, Year 1, we must use the basic accounting equation, which is:
Assets = Liabilities + Shareholders' Equity
In this case, shareholders' equity would be the sum of Capital Stock and Retained Earnings. We do not need to consider the self-check questions provided, as they are not relevant to solving this problem. Given the information:
- Accounts Payable = $12,000
- Accounts Receivable = $30,000
- Land = $90,000
- Cash = $7,000
- Building = $250,000
- Notes Payable = $135,000
- Capital Stock = $188,000
- Retained Earnings = $100,000
We can now calculate shareholders' equity:
Shareholders' Equity = Capital Stock + Retained Earnings = $188,000 + $100,000 = $288,000
Now we plug this into our accounting equation:
Assets = $12,000 (Accounts Payable) + $135,000 (Notes Payable) + $288,000 (Shareholders' Equity)
Assets = $435,000
We know that Assets also include Cash, Accounts Receivable, Land, and the Building. So, we can subtract these known asset values from the total assets to find the value of Equipment:
Equipment value = Total Assets - Cash - Accounts Receivable - Land - Building
Equipment value = $435,000 - $7,000 - $30,000 - $90,000 - $250,000
Equipment value = $58,000
The recorded value of Equipment on the balance sheet is $58,000.