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Consider the following independent situations:
a. If the assets of a business are [tex]$95,000 and the liabilities total $[/tex]80,000, how much is the owner's equity?
b. If the owner's equity in a business is [tex]$70,000 and the liabilities are $[/tex]35,000, how much are the assets?



Answer :

GinnyAnswer
Certainly! Let's address each situation step-by-step.

### Situation a
You are given:
- Assets: [tex]\( \$95,000 \)[/tex]
- Liabilities: [tex]\( \$80,000 \)[/tex]

To find the owner's equity, you can use the accounting equation:
[tex]\[ \text{Assets} = \text{Liabilities} + \text{Owner's Equity} \][/tex]

Rearranging this equation to solve for the owner's equity:
[tex]\[ \text{Owner's Equity} = \text{Assets} - \text{Liabilities} \][/tex]

Plugging in the given values:
[tex]\[ \text{Owner's Equity} = \$95,000 - \$80,000 \][/tex]
[tex]\[ \text{Owner's Equity} = \$15,000 \][/tex]

So, in Situation a, the owner's equity is [tex]\( \$15,000 \)[/tex].

### Situation b
You are given:
- Owner's Equity: [tex]\( \$70,000 \)[/tex]
- Liabilities: [tex]\( \$35,000 \)[/tex]

Again using the accounting equation:
[tex]\[ \text{Assets} = \text{Liabilities} + \text{Owner's Equity} \][/tex]

Plugging in the given values:
[tex]\[ \text{Assets} = \$35,000 + \$70,000 \][/tex]
[tex]\[ \text{Assets} = \$105,000 \][/tex]

So, in Situation b, the assets amount to [tex]\( \$105,000 \)[/tex].

### Summary
- Situation a: Owner's Equity is [tex]\( \$15,000 \)[/tex]
- Situation b: Assets are [tex]\( \$105,000 \)[/tex]

These values are determined using the fundamental accounting equation and the provided information in each situation.

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