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A company's balance sheet shows: cash $24,000, accounts receivable $30,000, equipment $50,000, and equity $72,000. what is the amount of liabilities?

Answer :

ayune

Using the balance sheet equation, the company's liability is $32,000

The formula for balance sheet is:

Assets = Liabilities + Equity

Based on their ability to be converted into cash, assets are classified into:

  • fixed assets ( example: properties, equipment, plant, etc.)
  • current assets ( example: cash, deposit accounts, accounts receivable, money orders, etc.)

Information given in the problem:

Assets:

cash $24,000

accounts receivable $30,000

equipment $50,000

Hence, total assets = $24,000 + $30,000 + $50,000 = $104,000

Equity: $72,000

Apply balance sheet formula:

Liabilities  = Assets -  Equity

                 =  $104,000 - $72,000 = $32,000

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