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18 December, 15:23

1. Calculate owners' equity. Pasta Enterprises has $42,000 in cash, $20,000 in inventory, $17,000 balance due to creditors, and $21,000 balance due from customers. What is the amount of owners' equity?

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  1. 18 December, 16:07
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    The amount of owners' equity is $66,000

    Explanation:

    Basing on the balance sheet equation:

    Assests = Liabilities + Owners' equity

    Therefore:

    Owners' equity = Assests - Liabilities

    Pasta Enterprises has $42,000 in cash, $20,000 in inventory, and $21,000 balance due from customers.

    Assests = Cash + Inventory + Balance due from customers = $42,000 + $20,000 + $21,000 = $83,000

    Liabilities = Balance due to creditors = $17,000

    Owners' equity = $83,000 - $17,000 = $66,000
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