Question

Construct a balance sheet for Sophie’s Sofas given the following data. What is shareholders’ equity? Cash balances = $10,000 Inventory of sofas = $200,000 Store and property = $100,000 Accounts receivable = $22,000 Accounts payable = $17,000 Long-term debt = $170,000

Answer 1

Answer:

Balance Sheet of Sophie's Sofas for the year ended December 31th 20XX

Cash                           10,000       Account Payable         17,000

Account Receivable 22,000       Long Term Debt        170,000

Inventory                 200,000      Total Liabilities           187,000

Current Assets        232,000       Stockholders Equity 145,000

PPE                          100,000

Total Assets            332,000       Total SE + Liab          332,000

Explanation:

We calculate equity using the accounting equation:

Assets = Liabilities + Equity

We add all the assets in one column, and the liab  in another. Now, once we got these two, we calculate equity by subtracting:

332,000 - 187,000 = Equity = 145,000