Question

Jones Enterprises was started when it acquired $3,750 cash from creditors and $11,250 from owners. The company immediately purchased land that cost $13,000.
(A) Record the events under an accounting equation.
(B) After all the events have been recorded, Jones's obligations to creditors represent what percent of total assets?
(C) After all the events have been recorded, Jones stockholders' equity represents what percent of total assets?

Answer 1

Answer:

(A) $2,000

(B) 25%

(C) 75%

Explanation:

(A) Accounting equation ;

Non-current Assets+ Current Assets = Stockholders' equity + liability

$13,000 + current Assets = $11,250 + $3,750

Current Asset (Cash or Bank Balance) = $15,000- $13,000

                                                                = $2,000

(B) Loan -Asset % = $3,750/$15,000 x 100%

                             = 25%

(C) Stock-holders' equity- Assets = $11,250/ $15,000 x 100%

                                                       =75%