Given the following, what is the amount of equity. Premises 50,000; bank overdraft 5000; Stock 18,500; Cash 1100; Creditors 3,000 A. 71600 B. 66100 C. 87500 D. 61600
Question
Given the following, what is the amount of equity. Premises 50,000; bank overdraft 5000; Stock 18,500; Cash 1100; Creditors 3,000 A. 71600 B. 66100 C. 87500 D. 61600
Solution
To calculate equity, we need to subtract the company's total liabilities from its total assets.
Here, the total assets are the sum of the premises, stock, and cash. That is, 50,000 (premises) + 18,500 (stock) + 1,100 (cash) = 69,600.
The total liabilities are the sum of the bank overdraft and creditors. That is, 5,000 (bank overdraft) + 3,000 (creditors) = 8,000.
So, the equity is total assets - total liabilities = 69,600 - 8,000 = 61,600.
Therefore, the answer is D. 61600.
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