 Hello, in this presentation we will be working short problems that have calculations involved in them. In a practice, in a test situation, you may see these problems in the format of multiple choice questions or in the format of short answer questions, but either way, they will be problems dealing with some type of number calculation that will be needed. First question, a company's balance sheet shows cash of 50,000, accounts receivable of 30,000, office equipment of 64,000, and accounts payable of 31,000. What is the amount of the owner's capital? So here's we're going to have to break these down into our accounting equation. I'm going to do these in Excel. You can follow along with a piece of paper or whatever works best for you. If you can practice with an Excel, I recommend doing that because you can you can put the numbers and move numbers around a lot more easily and get the concepts without having to take so much time putting numbers into a calculator. So I'm going to use Excel here. So here's going to be our problem up top. A company's balance sheet shows cash 50,000, accounts receivable 30,000, and office equipment of the 64,000, and accounts payable of 31,000. We're looking for the equity. The first thing I'm going to do is put the accounting equation here. So I'm just going to put it in a long-formance assets, going to equal, and then I'm going to say liabilities just with an L plus equity, assets equal liabilities plus equity. And then just go through here and say what our assets liabilities and equity where we have a company's balance sheet shows cash. That's going to be an asset of 50,000. We got receivable. That's going to be an asset of 30,000. And then we have equipment of an asset of 64,000 and accounts payable. That will be a liabilities. I'm going to put that on the other side of the equation here. That being 31,000. And we need to find equity. So if I sum these up equals the sum of the assets, 50 plus 30 plus 64 being that 144. And of course, the liabilities equaling the 31. So we just need then to find the equity here being our unknown factor. And therefore, if this is the unknown, we're going to subtract 31 from both sides. So negative 31,000, negative, or let's put it here, negative 31,000. And then we're going to say that the 144 minus the 31 will give us that 113. This of course is going to be zero. And therefore, E is equal to the 113. We can rewrite that as E is equal to 113,000. Our next problem will be similar in nature. And that says that we have current year, the assets and liabilities are as follows. Cash $28,050 supplies $880 equipment $8,700 accounts payable $7,400. What is the amount of owner's equity as of August 31st of the current year? So again, we're going to go to the Excel and take a look at what we have at this time. So here's the Excel, same problem up top. Once again, we're going to write down our account equation. I'm just going to abbreviate assets equal the liabilities plus equity. And that's now we're just going to put this amounts into this account and equation cash $28,50 supplies is an asset $880 equipment is an asset $8,700. And of course, the payable is a liability of $7,400. And then if we were just to add up the assets equals the sum of the $28,50 plus the $880 plus the $8,007 gives us that $37,630. And we're just going to say that that is going to be equal to the liabilities of $7,004 plus the equity. There's our equation. Of course, we are now solving for E. So we're solving for E. I'm now going to scroll down so we can't see the original problem, but we shouldn't need it at this point. So we're going to subtract the $7,400 from each side, $7,400 from each side. In order to remain with just the E, if we subtract that out, we're going to say that we have $30,230 is going to be equal to, this of course adds up to zero if we subtract that out. And that's going to equal E. And therefore E is equal to this $30,230. Now I'm trying to put this in Excel so that we can actually see a calculation as you would write it down on paper, of course, here. So hopefully if you're writing it down on paper, that will look familiar or look the same kind of format. Next problem, we're going to say if the liabilities of a business increased $97,000 during a period of time and the owner equity in the business decreased $41,000 during the same period, the assets of the business must have. Now this one's same account equation throwing a bit of a twist in that we're talking about the activity, the increasing and the decreasing. Note that whether we're talking about the same point in time or the activity over time, we can use that same accounting equation thinking about the activity in this case rather than the point in time. So here is the same problem here. We're just going to do our same accounting equation just as if it was the point in time that we were working with last time. And that's going to be asset sequel liabilities plus equity. I'm going to write equity over here knowing that we're talking about owner's equity here. But if we were talking about a corporation be sure holder's equity or partnership partner's equity, really the equity as a whole as a total and form that of a accounting equation will be the same no matter the type of entity whether so proprietor partnership or a corporation. So then we're going to say if the liabilities of a business increased. So we're going to say the liabilities are increasing 97,000 during the period and the equity is decreasing. I'm going to say negative 41,000. Now there's a couple ways you can represent that negative note. I'm going to say complete our equation during the period. What are the assets? Now note that I put a negative number for the 41 Excel representing the negative number with brackets. And clearly now we've got this plus a negative number. Now if we were to rewrite that algebraically, we might just say assets equal 97,000. And then if I have a negative and a positive right next to each other, I typically just rewrite that I would just say, okay, that means minus this 41,000, a positive and a negative right next to it will just convert to basically a minus that number. And if that's an easier way to see that maybe that'll be helpful whoever you work with the algebra. So I'm going to say that equals and then we just do the subtraction problem, which would be the 97 minus the 41. Therefore assets would be 56,000. Next problem says purchases equipment costing 4,900 on credit. The effect on the accounting equation would be what? So we're basically looking for the transaction, the journal entry, but being recorded in terms of the accounting equation, assets equal liability plus equity. Here's the same problem in Excel. So I would just write this down if we're doing this on paper, I'd write down our accounting equation every time and then just record the transaction with regard to the accounting equation. If we purchased equipment costing 4,900, I would first ask is cash affected? In this case, it's not because we bought it on credit. On credit means that we paid for it with something other than cash. So we might know that that's kind of a liability, but it might be a little difficult for us to know whether it's going up or down. And it might be difficult later on for us to know that it's going to be debited or credited. Therefore, I would then think about what we received. This case, receiving equipment. Equipment is an asset, and it's pretty easy for us to understand that the asset is going up. So I would start with the asset of 4,900, and that's an increase of 4,900. And then that's going to be equal to something on the other side, in this case, a liability. The liability is the on account. That's the accounts payable that will be increasing. Now we know it's going to increase for a couple different reasons. One, we know that this side increased. Therefore, this side of the SQL sign is affected. This must, too, be increasing. So that's going to be an increase here. We also know that, of course, a liability is something we don't like really. We owe money in the future or owe something in the future money in this case. And the bad thing is increasing. Therefore, the liability will be going up. And that means that there's going to be no effect on the equity section. So assets are going to increase. Liabilities will increase. And that will remain in balance from this transaction. Next problem says, equity is 390,000. And liabilities are 198,000. Then assets must equal what? So we're going into this accounting equation once again. As always, when dealing with the accounting equation, first step, just to write it down. So we're going to say assets are going to be equal to liabilities plus equity. That should just become routine after a while. So we're going to say equity is 390,000. I'm going to start over here on the equity side, 390,000. Then we're going to say liabilities are 198,000. And filling the rest, of course, we are now looking for the assets being equal to the liabilities plus equity. Now this one, of course, the two are on the same side. So that's going to make an asset's calculation pretty not too difficult. We're going to say that's going to be equal to 198 plus the 390. Now note that if these are multiple choice questions, it'll have all the wrong answers in there, of course. So it'll have basically every combination of the number that's going to be incorrect, meaning it'll subtract these two and do any kind of combination that you can algebraically do with a couple numbers. So just be careful that you're going the right way. Because if it is a multiple choice, you might just see the answer and think you got it right when, in reality, it's going to show all the wrong answers that are typical. Next problem, assets are 319,000. And liabilities are 190,000. Then equity equals, once again, looking at our accounting equation. Same problem here. We're going to first write down the accounting equation. Assets equal liabilities plus equity. And then we're just going to fill in our blanks here. 319,000 is going to be equal to the liabilities 190,000 plus equity. And I would just get to the routine of actually writing this down every time. You might just look at this and say, I should just do a subtraction or something. But you're more likely to make a mistake. And it's worth the time, the little time it takes, to actually write this down. So we're going to write it down, solving for equity, meaning we've got to subtract 190 from each side. We're going to do it this side. Subtract 190 from that side. And then perform the calculation 319 minus 190 is 129. If, of course, we say 190 minus 190, that is 0. And that's going to equal equity. If we flip that around, we're just going to say that equity then is equal to 129,000. Next one, we're going to say, if assets are 89,000 and liabilities are 27,800, then equity equals what? Once again, we'll just write down the accounting equation. Assets are going to be equal to liabilities plus equity. We're going to plug in then the numbers of 89,000, which will be equaling the liabilities of 27,800 plus the equity we're solving for equity. We're going to therefore subtract 27,8 from each side. 27,8 is going to be subtracted. 27,8 subtracted. And then if we do the math, we're going to say that this number, 89,000 minus 27,800, is 61,200. And that will then be equal to, this should be an equal sign as well, equal to. And if we sum these up, obviously 27,800 minus 27,800 is equal to 0 plus equity. Therefore, equity is equal to this 61,200. Next problem, we're going to say that the assets of the company total 714,000, the liabilities total 207,000. What is equity? We'll write down the accounting equation. Assets are going to be equal to liabilities plus equity. And we're saying that we have 714,000 equal to liabilities of 207,000 plus equity. And once again, we're going to subtract the 207,000 from each side, 207,000. If we do the math, then we're going to say that the 714,000 minus the 207,000 will equal 507. That should be equal to, if we do the math here, we have 207 minus 207,000 plus equity. Therefore, equity is equal to this 507,000. Next problem, cash, 21,000, accounts receivable 7,350, supplies 700 equipment, 12,100, and accounts payable 9,400. We need then to solve for equity. Once again, we'll write down the accounting equation. Assets are going to be equal to liabilities plus the equity. And we're just going to now list the accounts that are going to be in the right category. Cash being an asset, 21,000. Note that we will have to just memorize what type of accounts fall under these categories and or have a cheat sheet whenever possible to give that information. Best cheat sheet typically being a trial balance. Then we've got 7,350 supplies 700 equipment, 12,100. Then we have the liabilities, accounts payable 9,400. And then if we were to add those up, we're just going to say some of. We have the 21,000 plus the 7,350 plus the 700 plus the 12,100. That is going to be equal to. We're going to just bring down, of course, that 9,400 plus the equity. So this is going to be our new equation. And then we just need to, once again, subtract the equity from each side, negative 9,400. And over here, negative 9,400. If we do the math then, we're going to say that we have the 41,150 minus the 9,004, which is 3,750 equal to. We know that, of course, 9,004 minus 9,004 will equal 0 plus the equity. Therefore, equity is going to be equal to the 31,750.