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21 March, 21:53

3. Calculate the equity each of these people has in his or her home: Fred just bought a house for $200,000 by putting 10% as a down payment and borrowing the rest from the bank. Freda bought a house for $150,000 in cash, but if she were to sell it now, it would sell for $250,000.

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  1. 21 March, 22:21
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    1. $20,000

    2. $250,000

    Explanation:

    In the balance sheet, the assets, liabilities, and stockholder equity is recorded. In this the accounting equation is used which is shown below:

    Total assets = Total liabilities + stockholder equity

    The debit and credit side of the balance sheet should always be equal and balanced.

    Moreover, it always is prepared on the specified date.

    In the given case, the equity value would be

    1. Assets = $200,000

    Down payment = $200,000 * 10% = $20,000

    Borrowed amount or Liabilities = $200,000 - $20,000 = $180,000

    So, the equity would be $20,000

    2. Purchase price = $150,000

    Market value to sell = $250,000

    The market value would be considered as an equity because there is no liability i. e $250,000
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