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25 April, 11:05

Bishop, Inc., is obligated to pay its creditors $7,800 during the year. a. What is the market value of the shareholders' equity if assets have a market value of $9,400? (Do not round intermediate calculations.) b. What is the market value of the shareholders' equity if assets equal $6,700? (Do not round intermediate calculations.)

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  1. 25 April, 12:22
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    (a) $1,600

    (b) $0

    Explanation:

    Given that,

    Total liabilities = $7,800

    (a) According to the accounting equation,

    Total assets = Total liabilities + Stockholder's equity

    $9,400 = $7,800 + Stockholder's equity

    $9,400 - $7,800 = Stockholder's equity

    $1,600 = Stockholder's equity

    (b) Total assets = Total liabilities + Stockholder's equity

    $6,700 = $7,800 + Stockholder's equity

    $6,700 - $7,800 = Stockholder's equity

    $0 = Stockholder's equity
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