Question

Baltimore Company's complete assets and liabilities are Accounts Receivable $2,650, Equipment $11,200, Accounts Payable $7,500, Prepaid Rent $2,000, Supplies $875, Bank Loan $4,400, and Tools $835. Baltimore's total equity is: (All account balances are normal.)

Answer 1

To calculate Baltimore Company's total equity, sum all assets ($17,560) and subtract the total liabilities ($11,900). The equity is found to be $5,660.

Step-by-step explanation:

The student is asking how to calculate a company's total equity given a list of its assets and liabilities. To find the total equity, one must understand the accounting equation, which states that Assets = Liabilities + Equity. Therefore, to find Equity, we rearrange the equation to Equity = Assets - Liabilities.

Adding up all the assets: Accounts Receivable ($2,650) + Equipment ($11,200) + Prepaid Rent ($2,000) + Supplies ($875) + Tools ($835) gives us a total asset value of $17,560.

Then, we sum the liabilities: Accounts Payable ($7,500) + Bank Loan ($4,400), resulting in a total of $11,900.

Finally, subtract the total liabilities from the total assets to obtain the equity: $17,560 - $11,900 = $5,660.

Therefore, Baltimore Company's total equity is $5,660.