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5 July, 04:06

Just before Johnson Laboratories opened for business, Howard Johnson, the owner, had the following assets and liabilities. Cash $ 39,600 Laboratory Equipment 74,700 Laboratory Supplies 5,900 Loan Payable 14,200 Accounts Payable 9,650 Determine the totals that would appear in the firm's fundamental accounting equation.

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  1. 5 July, 05:16
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    Assets $ 120,200

    Liabilities $ 23,850

    Owners Equity $ 96,350

    Explanation:

    Assets comprise of the following components:

    Cash $ 39,600

    Laboratory Supplies $ 5,900

    Laboratory Equipment $ 74,700

    Total Assets $ 120,200

    Liabilities comprise the following components:

    Accounts Payable $ 9,650

    Loan Payable $ 14,200

    Total Liabilities $ 23,850

    Since Johnson Laboratories is just starting its business, there would be no income statement items. It is safe to assume that the balance of assets and liabilities is the Owners' Equity.
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