Chapter 1, Problem 3SEA

Calculate owners’ equity. (LO 4). Doughnut Company shows $130,000 worth of assets on its December 31, 2009, balance sheet. If the company’s total liabilities are $55,800, what is the amount of owners’ equity?

Solution:

$\begin{array}{l}\begin{array}{ccccc}\underset{\_}{\text{Assets}}& =& \underset{\_}{\text{Liabilities}}& +& \underset{\_}{\text{Owner's}\text{equity}}\\ 130,000& =& 55,800& +& \text{x}\end{array}\\ \text{x}=\$74,200\end{array}$