Ask Question
11 September, 07:05

Sergei has $23000 in assets and $13200 in liabilities. If Sergei used $3000 of his cash to pay off bank loan, how would that impact his owner's equity? Use the balance sheet equation to illustrate your answer

+4
Answers (1)
  1. 11 September, 08:36
    0
    Assets = Liabilities + Owner's Equity

    To know the Owner's Equity, use this formula:

    Assets - Liabilities = Owner's Equity

    $23,000 - $13,200 = $9,800

    Sergei wants to pay his bank loan using his $3,000 cash

    *Cash is an Asset and Bank Loan is a Liability, therefore, Sergei needs to deduct $3,000 from the Asset (cash payment) and Liability (bank loan)

    Assets: $23,000 - $3,000 = $20,000 (New Assets)

    Liabilities: $13,200 - $3,000 = $10,200 (New Liabilities)

    To get the Owner's Equity after the payment of bank loan, use this formula: Assets - Liabilities = Owner's Equity

    $20,000 - $10,200 = $9,800

    There is no changes in the Owner's Equity after the bank loan was paid.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Sergei has $23000 in assets and $13200 in liabilities. If Sergei used $3000 of his cash to pay off bank loan, how would that impact his ...” in 📘 SAT if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers