The fundamental accounting equations for several businesses follow. Supply the missing amounts.
| | Assets | = | Liabilities | | Owner's Equity |
|---|-----------|---|-------------|---|----------------|
| 1 | $ 27,600 | = | $ 5,460 | + | |
| 2 | $ 24,000 | = | $ 5,080 | + | |
| 3 | $ 96,950 | = | | + | $ 10,350 |
| 4 | | = | $ 4,300 | + | $ 32,275 |
| 5 | $ 108,800 | = | | + | $ 25,075 |
Answer (2)
To find the missing amounts in the accounting equation, we calculated Owner's Equity and Liabilities for different rows based on the formula: Assets = Liabilities + Owner's Equity. The missing values are: Row 1: Owner's Equity = $22,140, Row 2: Owner's Equity = $18,920, Row 3: Liabilities = $86,600, Row 4: Assets = $36,575, Row 5: Liabilities = $83,725.
;
Calculate Owner's Equity in row 1: $27,600 - $5,460 = \boxed{$22,140}.
Calculate Owner's Equity in row 2: $24,000 - $5,080 = \boxed{$18,920}.
Calculate Liabilities in row 3: $96,950 - $10,350 = \boxed{$86,600}.
Calculate Assets in row 4: $4,300 + $32,275 = \boxed{$36,575}.
Calculate Liabilities in row 5: $108,800 - $25,075 = \boxed{$83,725}.
Explanation
Understanding the Accounting Equation We are given the fundamental accounting equation: Assets = Liabilities + Owner's Equity. We need to find the missing values in the table using this equation.
Calculating Owner's Equity (Row 1)
For the first row, we need to find the Owner's Equity. Using the equation, Owner's Equity = Assets - Liabilities = $27,600 - $5,460 = $22,140.
Calculating Owner's Equity (Row 2)
For the second row, we again need to find the Owner's Equity. Owner's Equity = Assets - Liabilities = $24,000 - $5,080 = $18,920.
Calculating Liabilities (Row 3)
For the third row, we need to find the Liabilities. Liabilities = Assets - Owner's Equity = $96,950 - $10,350 = $86,600.
Calculating Assets (Row 4)
For the fourth row, we need to find the Assets. Assets = Liabilities + Owner's Equity = $4,300 + $32,275 = $36,575.
Calculating Liabilities (Row 5)
For the fifth row, we need to find the Liabilities. Liabilities = Assets - Owner's Equity = $108,800 - $25,075 = $83,725.
Final Answer Therefore, the missing amounts are:
Row 1: Owner's Equity = $22,140 Row 2: Owner's Equity = $18,920 Row 3: Liabilities = $86,600 Row 4: Assets = $36,575 Row 5: Liabilities = $83,725
Examples
Understanding the fundamental accounting equation is crucial for managing personal finances. For instance, if you have $50,000 in assets (like savings and investments) and $10,000 in liabilities (like credit card debt), your owner's equity (net worth) is $40,000. This equation helps you track your financial health and make informed decisions about spending, saving, and investing. By regularly assessing your assets, liabilities, and equity, you can gain a clear picture of your financial standing and work towards your financial goals.
