Question

Just before Johnson Laboratories opened for business, Howard Johnson, the owner, had the following assets and liabilities. Cash $ 39,600 Laboratory Equipment 74,700 Laboratory Supplies 5,900 Loan Payable 14,200 Accounts Payable 9,650 Determine the totals that would appear in the firm’s fundamental accounting equation.

Answer 1

Answer:

Assets                      $  120,200

Liabilities                  $   23,850

Owners Equity         $   96,350

Explanation:

Assets comprise of the following components:

Cash                                   $ 39,600

Laboratory Supplies         $    5,900

Laboratory Equipment     $ 74,700

Total Assets                       $ 120,200

Liabilities comprise the following components:

Accounts Payable            $  9,650

Loan Payable                   $ 14,200

Total Liabilities                 $ 23,850

Since Johnson Laboratories is just starting its business, there would be no income statement items. It is safe to assume that the balance of assets and liabilities is the Owners' Equity.