Jack plans to start his new business with $10,000 in savings from his full-time job, a bank loan of $15,000 for his equipment, and his truck which he currently owns and has a value of $7,000. What will his owner's equity be on the pro forma balance sheet?

Question

Quizplus · Accepted Answer

Owner's equity is calculated as the total assets minus total liabilities. Jack's assets include his savings ($10,000) and his truck ($7,000), totaling $17,000. The bank loan is a liability and does not affect owner's equity directly. Therefore, his owner's equity is $17,000.

Jack Plans to Start His New Business with $10,000 in Savings