Question

Jefferson Handyman Services has total assets for the year of $ 15 comma 400 and total liabilities of $ 8 comma 680. Requirements 1. Use the accounting equation to solve for equity. 2. If next year assets increased by $ 5 comma 000 and equity decreased by $ 3 comma 850​, what would be the amount of total liabilities for Jefferson Handyman​ Services?

Answer 1

Answer:

1. $6,720

2. $17,530

Explanation:

In this question, we use the accounting equation which is shown below:

Total assets = Total liabilities + Stockholder's equity

1. The equity value is computed by

$15,400 - $8,680 = Stockholder's equity

So, stockholder equity is $6,720

2. Since assets is assets is increased by $5,000 and the equity is decreased by $3,850

So, updated assets = $15,400 + $5,000 = $20,400

And, the updated equity is $6,720 - $3,850 = $2,870

So, the total liabilities equal to

= $20,400 - $2,870

= $17,530