The following table shows the assets and liabilities for Safeco Bank.

-Refer to the table above.Assuming that Safeco Bank loses 20 percent of its long-term investments,what is its stockholders' equity now?

Question

The following table shows the assets and liabilities for Safeco Bank.
 
-Refer to the table above.Assuming that Safeco Bank loses 20 percent of its long-term investments,what is its stockholders' equity now?

Quizplus · Accepted Answer

Long-term investments are part of assets, and losing 20% of it means that it decreases by $4,000 ($20,000 x 20%). Therefore, total assets become $50,000 + $1,000 + $4,000 = $55,000. To get stockholders' equity, we need to subtract total liabilities from total assets, which is $55,000 - $39,000 = $16,000. Therefore, the answer is C, $16,000.

The Following Table Shows the Assets and Liabilities for Safeco