Consider the following information: Cash: $10,000 Accounts Payable: $3,000 Accounts Receivable: $2,000 Office Supplies: $1,000 Furniture: $15,000 Notes Payable: $10,000 Equity: $5000 From the above set of data, what is the total for assets, liabilities, and equity

The total for assets, liabilities, and equity:

Total assets               $28,000

Total liabilities           $13,000

Total equity               $15,000

Explanation:

a) Data and Calculations:

Cash:                            $10,000

Accounts Receivable:  $2,000

Office Supplies:            $1,000

Furniture:                    $15,000

Total assets               $28,000

Accounts Payable:      $3,000

Notes Payable:          $10,000

Total liabilities           $13,000

Equity:                         $5,000

Retained Earnings    $10,000

Total equity               $15,000

Retained Earnings = Assets - (Liabilities + Equity)

b) The accounting equation states that assets = liabilities + equity.  This equation is always true with each transaction that occurs, provided it is correctly posted.  It is the basis of the double-entry system of accounting with each transaction affecting at least two accounts.

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