Question

On July 1 of the current year, the assets and liabilities of John Wong, DVM, are as follows: Cash, $15,000; Accounts Receivable, $12,300; Supplies, $3,100; Land, $35,000; Accounts Payable, $8,700. What is the amount of owner's equity (John Wong’s capital) as of July 1 of the current year?
1. $65,400
2. $43,700
3. $32,100
4. $56,700

Answer 1

Answer:

4. $56,700

Explanation:

The accounting equation is:

Assets = Owner's Equity + Liabilities so,

if we want to know the owner's equity (OE), the formula should be

• OE= Assets - Liabilities

let's see the assets of the company:

• Cash: $15,000;
• Accounts Receivable, $12,300;
• Supplies, $3,100;
• Land, $35,000

Total Assets = $15,000+$12,300+$3,100+$35,000= $65,400

And the only liabilitie for the company is : Accounts Payable: $8,700

so, OE= $65,400 - $8,700 = $56,700