Martin's Spa and Salon's assets total $148,000.The total amount of debt that it owes to others is $87,000.Which of the following is correct?
A) David's owners' equity is $87,000.
B) The owners' equity in David's is $61,000.
C) David's liabilities are $148,000.
D) The firm's liabilities are $61,000.
E) The firm has more owners' equity than liabilities.

Question

Quizplus · Accepted Answer

To find the owners' equity, we need to subtract the total amount of debt (liabilities) from the total assets of the company. Therefore, owners' equity = total assets - total liabilities.
Owners' equity = $148,000 - $87,000 = $61,000.

Option A is incorrect because it mistakenly refers to David's instead of Martin's.
Option C and D are incorrect because they misstate the amounts of liabilities and assets.
Option E is also incorrect because we cannot determine if the owners' equity is greater than the liabilities based on the given information alone.

Martin's Spa and Salon's Assets Total $148,000