Tremonti, Inc., is obligated to pay its creditors $9,200 during the year. a. What is the value of the shareholders' equity if assets equal $10,900? b. What is the value of the shareholders' equity if assets equal $8,500?

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16 March, 09:47

Tremonti, Inc., is obligated to pay its creditors $9,200 during the year. a. What is the value of the shareholders' equity if assets equal $10,900? b. What is the value of the shareholders' equity if assets equal $8,500?

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Raiden · Answer 1

a. Assets equal $10,900, Shareholders' Equity: $1,700

b. Assets equal $8,500, Shareholders' Equity: - $700

The company losses and does not remain Shareholders' Equity

Explanation:

Basing on the balance sheet equation:

Assets = Liabilities + Shareholders' Equity

Shareholders' Equity = Assets - Liabilities

In Tremonti, Inc., the company is obligated to pay its creditors $9,200 during the year, therefore Liabilities are $9,200

a. Assets equal $10,900

Shareholders' Equity = $10,900 - $9,200 = $1,700

b. Assets equal $8,500

Shareholders' Equity = $8,500 - $9,200 = - $700

The company losses and does not remain Shareholders' Equity