Use the following information as of December 31 to determine equity.
A)$57,000.
B)$141,000.
C)$297,000.
D)$438,000.
E)$579,000.

Question

Use the following information as of December 31 to determine equity. 
A)$57,000. 
B)$141,000. 
C)$297,000. 
D)$438,000. 
E)$579,000.

Quizplus · Accepted Answer

To determine equity, we need to subtract liabilities from assets. 
Assets:
Cash: $107,000
Accounts Receivable: $92,000
Inventory: $198,000
Prepaid Expenses: $4,000 
Land: $200,000
Building: $800,000
Equipment: $300,000 
Less: Accumulated Depreciation: $167,000
Total Assets: $1,535,000

Liabilities:
Accounts Payable: $33,000
Interest Payable: $12,000
Notes Payable (due in 5 years): $115,000
Mortgage Payable: $970,000
Total Liabilities: $1,130,000

Equity:
Total Assets - Total Liabilities = $1,535,000 - $1,130,000 = $405,000
Therefore, the correct answer is C) $297,000.

Use the Following Information as of December 31 to Determine