Question

Tremonti, Inc., is obligated to pay its creditors $7,900 during the year. a. What is the value of the shareholders’ equity if assets equal $9,100? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) b. What is the value of the shareholders’ equity if assets equal $6,900? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

Answer 1

A.$1,200

B. $0

Step-by-step explanation:

A. Calculation for the value of the shareholders’ equity if assets equal $9,100

Using this formula

Shareholders’ equity=Maximum[(Assets - Liabilities),0]

Let plug in the formula

Shareholders’ equity=Maximum[($9,100-$7,900),0]

Shareholders’ equity=$1,200

B. Calculation for the value of the shareholders’ equity if assets equal $6,900

Using this formula

Shareholders’ equity=Maximum[(Assets - Liabilities),0]

Let plug in the formula

Shareholders’ equity=Maximum[($6,900 -$7,900),0]

Shareholders’ equity=$0

Therefore the value of the shareholders’ equity if assets equal $9,100 will be $1,200 because the assets is higher than the liabilities while the value of the shareholders’ equity if assets equal $6,900 will be $0 because the Liabilities is higher than the assets.