Question

KCCO, Inc., has current assets of $6,000, net fixed assets of $25,100, current liabilities of $4,950, and long-term debt of $12,000.
What is the value of the shareholders’ equity account for this firm? (Do not round intermediate calculations.)

Answer 1

The value of the company's shareholder's equity account is $14,150

Explanation

We know that:

Current Assets = $6,000

Net Fixed Assets = $25,100

⇒ Total Assets = Current Assets + Non-current assets

Net Fixed Assets is a non-current asset

⇒ Total Assets = Current Assets + Net Fixed Assets

⇒ Total Assets = 6,000 + 25,100

⇒ Total Assets = $31,100

Current Liabilities = $4,950

Long-term debt = $12,000

⇒ Total Liabilities = Current Liabilities + Non-current Liabilities

Long-term debt is a non-current liability

⇒ Total Liabilities = Current Liabilities + Long-term debt

⇒ Total Liabilities = 4,950 + 12,000

⇒ Total Liabilities = $16,950

Now, Shareholder's Equity = Total Assets - Total Liabilities

⇒ Shareholder's Equity = 31,100 - 16,950

⇒ Shareholder's Equity = $14,150