Question

Shane's Catering began with cash of $10,000. Shane then bought supplies for $2,300 on account. Separately, Shane paid $7,500 for equipment. Answer these questions a. How much in total assets does Shane have? b. How much in liabilities does Shane owe? a. How much in total assets does Shane have? Shane has $ in total assets, b. How much in liabilities does Shane owe? Shane owes SL in liabilities

Answer 1

Answer:

Part (a) Shane has $ 12,300 in total assets

Part (b) Shane owes $ 2,300 in liabilities

Explanation:

Shane's Catering began with cash of $10,000

At the beginning the Accounting Records of Shane should reflect the following Account Balances

Cash $10000 (debit)

Owners Equity $ 10000 ( credit)

Shane then bought supplies for $2,300 on account.

When Shane buys supplies on account  the transaction is recorded as follows

Inventory $2300 (debit)

Account Receivable $ 2300

Shane paid $7,500 for equipment

When Shane pays for equipment in cash the transaction is recorded as follows

Equipment $7500(debit)

Cash $7500(credit)

Balance of Assets is calculated as:

Cash 10000+Inventory 2300- Cash 7500+ Equipment 7500 =$12300

Balance of Liabilities is calculated as:

Trade Receivable $ 2300