Final answer:
Calculating the totals for the debit and credit sides of the balance sheet by categorizing the given balances into assets, liabilities, and equity, we find that both sides equal to $250,000, which confirms the accounting equation (Assets = Liabilities + Owner’s Equity).
Step-by-step explanation:
To calculate the total of the debit and credit sides of the balance sheet, you categorize the given balances into assets and liabilities plus owner’s equity. The debit side typically includes assets, while the credit side covers liabilities and equity. The given balances are: Current Liabilities: $15,500, Bank Loan: $14,500, Owner’s Equity: $220,000, Fixed Assets: $180,000, Current Assets: $35,500, Investment: $34,500.
Adding the asset amounts:
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- Fixed Assets: $180,000
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- Current Assets: $35,500
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- Investment: $34,500
Total Assets (Debit Side) = $180,000 + $35,500 + $34,500 = $250,000
Adding the liabilities and equity amounts:
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- Current Liabilities: $15,500
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- Bank Loan: $14,500
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- Owner’s Equity: $220,000
Total Liabilities and Owner’s Equity (Credit Side) = $15,500 + $14,500 + $220,000 = $250,000
The total for both the debit and credit sides of the balance sheet is equal, maintaining the accounting equation Assets = Liabilities + Owner’s Equity. Therefore, the debit side totals to $250,000, as does the credit side.