Can you Understand & Solve Accounting Problems?

 A business has the following balances in its accounting records:

  • Cash: $50,000
  • Accounts Receivable: $100,000
  • Inventory: $75,000
  • Property, Plant, and Equipment: $500,000
  • Patents: $100,000
  • Accounts Payable: $200,000
  • Notes Payable: $300,000
  • Accrued Expenses: $50,000
  • Unearned Revenue: $25,000
  • Common Stock: $200,000
  • Retained Earnings: $75,000

The business owner is trying to determine the company's net worth. What is the company's net worth?

To determine the company's net worth, we need to calculate the total value of its assets and subtract its liabilities. In this case, the company's assets are worth $950,000 ($50,000 in cash + $100,000 in accounts receivable + $75,000 in inventory + $500,000 in property, plant, and equipment + $100,000 in patents). Its liabilities are worth $525,000 ($200,000 in accounts payable + $300,000 in notes payable + $50,000 in accrued expenses + $25,000 in unearned revenue). The company's equity is worth $425,000 ($200,000 in common stock + $75,000 in retained earnings). Therefore, the company's net worth is $425,000 ($950,000 in assets - $525,000 in liabilities)

Comments

  1. Mary2 April 2023 at 05:38

    In this case, the company's assets are worth $825,000 ($50,000 in cash + $100,000 in accounts receivable + $75,000 in inventory + $500,000 in property, plant, and equipment + $100,000 in patents). Its liabilities are worth $575,000 ($200,000 in accounts payable + $300,000 in notes payable + $50,000 in accrued expenses + $25,000 in unearned revenue). The company's equity is worth $250,000 ($200,000 in common stock + $75,000 in retained earnings). Therefore, the company's net worth is $250,000 ($825,000 in assets - $575,000 in liabilities).

    ReplyDelete
    Replies
    1. Abdul2 April 2023 at 15:49

      This comment has been removed by the author.

      Delete
  2. venkat2 April 2023 at 06:12

    contact me through upwork

    ReplyDelete
  3. Gideon Khisa2 April 2023 at 06:38

    In this case, the company's assets are worth $825,000 ($50,000 in cash + $100,000 in accounts receivable + $75,000 in inventory + $500,000 in property, plant, and equipment + $100,000 in patents). Its liabilities are worth $575,000 ($200,000 in accounts payable + $300,000 in notes payable + $50,000 in accrued expenses + $25,000 in unearned revenue). The company's equity is worth $275,000 ($200,000 in common stock + $75,000 in retained earnings). Therefore, the company's net worth is $250,000 ($825,000 in assets - $575,000 in liabilities).

    ReplyDelete
  4. Christine2 April 2023 at 09:43

    Net worth 250,000

    ReplyDelete
  5. Paras2 April 2023 at 09:54

    See i am well commerce student...
    I am very good in accounting and finance...
    So for this we have to make 3 accounts,which is name as 1st account as Trading account,2nd account as profit and loss account and in this account we will know that company net worth..and the last 3rd account will be our balance sheet for the year ended....

    So we have to make an entry in this all account one by one...
    So i am making here in my books because you only want to know the company's net worth so I will only tell you the company's net worth....
    Therefore the Company net worth is $250,000..

    So this is the answer of your question...
    Thankyou!!

    ReplyDelete
  6. Abdul2 April 2023 at 16:04

    agreed :)
    Element Amount
    Asset 825,000.00
    Capital -275,000.00
    Liability -575,000.00

    Net Worth: (Asset-Liability) 250,000.00

    ReplyDelete
  7. Akshat Shah2 April 2023 at 21:32

    In this case the company's net worth will be equal to $2,50,000.
    I am a CA student and can definitely help you with your problem.

    ReplyDelete
  8. mitesh3 April 2023 at 06:53

    This accounting problem involves determining a business's net worth based on the balances in its accounting records. To calculate the net worth, we need to determine the total value of the company's assets and subtract its liabilities.

    The business's assets include cash, accounts receivable, inventory, property, plant, and equipment, and patents. The cash balance is $50,000, accounts receivable is $100,000, inventory is $75,000, property, plant, and equipment is $500,000, and patents are worth $100,000. Therefore, the total value of the assets is $950,000.

    The company's liabilities include accounts payable, notes payable, accrued expenses, and unearned revenue. The balance of accounts payable is $200,000, notes payable is $300,000, accrued expenses is $50,000, and unearned revenue is $25,000. Therefore, the total value of liabilities is $525,000.

    The company's equity includes common stock and retained earnings. The common stock balance is $200,000, and retained earnings is $75,000. Therefore, the total equity is $425,000.

    Finally, to calculate the company's net worth, we need to subtract the total liabilities from the total assets. Therefore, the company's net worth is $425,000 ($950,000 - $525,000).

    ReplyDelete
    Replies
    1. mitesh3 April 2023 at 06:54

      for more accounting query you can contact me on miteshwork10@gmail.com
      Thank you

      Delete

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