Given the following information, determine the amount of cash on the balance sheet, assuming that the company has only three assets. Liabilities equal $3,050; owner's equity equals $25,000; supplies equal $1,500; and land equals $22,500.

Question

Martha Wilkinson

Business

13 December, 09:46

Given the following information, determine the amount of cash on the balance sheet, assuming that the company has only three assets. Liabilities equal $3,050; owner's equity equals $25,000; supplies equal $1,500; and land equals $22,500.

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Answers (1)

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Briana Blanchard · Answer 1

The amount of cash on the balance sheet is $4,050

Explanation:

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

Total Assets = Total liabilities + stockholder's equity

The owner's equity and the liabilities are given in the question. We have to compute the value of the total assets which is shown below:

Total assets = Cash + supplies + land

= cash + $1,500 + $22,500

= cash + $24,000

So,

Put the values to the above equation

So, the answer is

cash + $24,000 = $3,050 + $25,000

Cash + $24,000 = $28,050

So, the cash = $28,050 - $24,000 = $4,050