Question

Total assets of Charter Company equal $700,000 and its equity is $420,000. What is the amount of its liabilities? b. Total assets of Martin Marine equal $500,000 and its liabilities and equity amounts are equal to each other. What is the amount of its liabilities? What is the amount of its equity?

Answer 1

Answer:

a. Total liabilities = $280,000

b. Total liabilities = $250,000

Total equity -= $250,000

Explanation:

As we know that

Total assets = Total liabilities + shareholder equity

So in the first case

The amount of the liabilities is

Total liabilities = Total assets - Total equity

                        = $700,000 - $420,000

                        = $280,000

And, in the second case, the total assets is $500,000

And, the liabilities and equity amounts are equal to each other

So in this case, the liabilities is $250,000 and the equity is $250,000

Answer 2

The liabilities can be estimated by the equation in which assets is equal to the amount of liabilities and capital.

i.e. Assets = Capital + Liabilities

(a) In order to find the liabilities of Charter company if the assets and equity are given , we will have to put the amounts in this equation.

Given

Assets are given as $700,000

Equity is given as $420,000

Calculations

$\begin{aligned}\rm Assets&= Capital+Liabilities\\\rm \ 700,000 &= \ 420,000+ Liabilities\\\rm Liabilities&= \ 700,000- \ 420,000\\\rm Liabil;ities &= \ 280,000 \end$

(b) We know that assets amount is equal to the combined amount of equity and liability.

Given further,  equity and liability amounts are equal in case of Martin Marine.

Therefore, half of assets will be liability and the other half will be equity. So, $500,000 is divided into two equal parts and equity $250,000 and Liability $250,000 is obtained.

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