Question

18.
On June 30, 2015, Martin Co. has assets of $22,000 and owners' equity of $5,000. What is the total of its liabilities on that date?

Answer 1

Answer:

$17,000.

Explanation:

According to the accounting equation,

                                     Assets = Liabilities + Capital / Owners equity

*the above equation can also be written as,

                                    Assets - capital = Liabilities.

lets substitute the values in their places,

                                  $22,000 = liabilities + $5,000

                                 $22,000-$5,000= liabilities

                                   $17,000= liabilities.

∴ total liabilities on that date were $17,000.