Question

The What-Not Shop owns the building in which it is located. This building initially cost $647,000 and is currently appraised at $819,000. The fixtures originally cost $148,000 and are currently valued at $65,000. The inventory has a book value of $319,000 and a market value equal to 1.1 times the book value. The shop expects to collect 96 percent of the $21,700 in accounts receivable. The shop has $26,800 in cash and total debt of $414,700. What is the market value of the shop's equity?

Answer 1

Answer:

$867,832

Explanation:

Calculation for the market value of the shop's equity

Equity Market value = $819,000 + $65,000 + 1.1($319,000) + .96($21,700) + $26,800 − $414,700

Equity Market value =$819,000 + $65,000 + $350,900+$20,832+$26,800 − $414,700

Equity Market value= $867,832

Therefore the market value of the shop's equity will be $867,832