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What is the recorded value of Equipment on Hercules Manufacturing, Incorporated's accounting records at December 31, Year 1, given the following information:

Accounts Payable: $12,000
Accounts Receivable: $30,000
Land: $90,000
Cash: $7,000
Building: $250,000
Equipment: ?
Notes Payable: $135,000
Capital Stock: $188,000
Retained Earnings: $100,000

1 Answer

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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.

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