Question

Based on the following information, determine the amount of equipment on the balance sheet. Total liabilities and owner's equity equals $44,750; total current assets equals $19,800; land equals $15,000; and accumulated depreciation—equipment equals $1,550.

Answer 1

Answer:

$9,950

Explanation:

The amount of equipment shall be determined through accounting equation which is given as follows:

Total Assets=Total liabilities+Total equity

Total assets=Current+Non current assets

Current assets+Non current assets=Total liabilities+Total equity

Non current assets=Cost of land+Cost of equipment-accumulated depreciation on equipment

Current assets+Cost of land+Cost of equipment-accumulated depreciation on equipment=Total liabilities+Total equity

Applying given data in the question to the above equation

$19,800+$15,000+Cost of equipment-$1,550=$44,750

$33,250+Cost of equipment=$44,750

Cost of equipment=$44,750-$33,250=$11,500

Amount of equipment on balance sheet=$11,500-$1,550=$9,950

Answer 2

Answer:

$11,500

Explanation:

the basic accounting equation:

assets = liabilities + shareholders' equity

liabilities + shareholders' equity = $44,750, so assets = $44,750

equipment account = total assets - current assets - land + accumulated depreciation

equipment account = $44,750 - $19,800 - $15,000 + $1,550 = $11,500

Accumulated depreciation is a contra-asset account that lowers the current value of the asset (in this case equipment) and is also included in the balance sheet with a credit balance.