Answer:
a. Assets equal $10,900, Shareholders' Equity: $1,700
b. Assets equal $8,500, Shareholders' Equity: -$700
The company losses and does not remain Shareholders' Equity
Explanation:
Basing on the balance sheet equation:
Assets = Liabilities + Shareholders' Equity
Shareholders' Equity = Assets - Liabilities
In Tremonti, Inc., the company is obligated to pay its creditors $9,200 during the year, therefore Liabilities are $9,200
a. Assets equal $10,900
Shareholders' Equity = $10,900 - $9,200 = $1,700
b. Assets equal $8,500
Shareholders' Equity = $8,500 - $9,200 = -$700
The company losses and does not remain Shareholders' Equity
