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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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  1. 16 March, 13:41
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    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
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