Calculate the missing cash at bank account balance from these balance sheet items: equity $5,700; debtors $890; creditors $450; inventory $360; loan to a friend $1,400.
A) $6,300
B) $3,500
C) $5,400
D) $2,600

Question

Quizplus · Accepted Answer

The balance sheet equation is Assets = Liabilities + Equity. Here, the assets include debtors, inventory, loan to a friend, and the missing cash at bank. The liabilities include creditors. So, the equation becomes Cash at Bank + $890 (debtors) + $360 (inventory) + $1,400 (loan to a friend) = $450 (creditors) + $5,700 (equity). Solving for Cash at Bank gives $3,500.

Calculate the Missing Cash at Bank Account Balance from These