Chuck McElray owns Common Grounds Coffee House. The business has cash of $2,000 and furniture that...
Chuck McElray owns Common Grounds Coffee House. The business has cash of $2,000 and furniture that cost $8,000. Debts include accounts payable of $1,000 and a $6,000 note payable. How much equity does McElray have in the business? Using McElray’s figures, write the accounting equation of Common Grounds Coffee House.
Homework Answers
Total Assets = Cash+ Furniture
Total Assets = $2,000 + $8,000
Total Assets = $10,000
Total Liabilities = Accounts Payable + Notes Payable
Total Liabilities = $1,000 + $6,000
Total Liabilities = $7,000
Using accounting equation:
Total Assets = Total Liabilities + Total Equity
$10,000 = $7,000 + Total Equity
Total Equity = $3,000
So, McElray have equity of $3,000 in the business.
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