Question

On January 1, 2027, Croando Industries had cash and common stock of $182,000. At that date, the company had no other asset or liability. What was the total equity of the company on that date?

A) $0
B) $182,000
C) Cannot be determined
D) Insufficient information provided

Answer 1

The total equity of Croando Industries on January 1, 2027, is $182,000, as there are no liabilities and the assets, consisting of cash and common stock, are equal to the total equity.

Step-by-step explanation:

The question asks to determine the total equity of Croando Industries on January 1, 2027, given that it had cash and common stock of $182,000, with no other assets or liabilities. In accounting, total equity is calculated as the difference between total assets and total liabilities. Given that there are no liabilities and the total assets are $182,000 in this scenario, the total equity of the company would be equal to the value of the assets, because equity is essentially the residual interest in the assets of a company after liabilities are paid off.

Therefore, the total equity of Croando Industries on that date would be $182,000, which corresponds to option B). There is enough information provided to determine that the total assets, which are just cash in this case, fully constitute the company's equity since there are no liabilities mentioned.