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Question Calculate the total liabilities of White Cleaning Services on 31/12/202231/12/2022 given that total assets on 31/12/202231/12/2022 were $126,000\$ 126,000, total assets on 1/1/20221/1/2022 were $85,000\$ 85,000, total liabilities on 1/1/20221/1/2022 were $17,000\$ 17,000, total revenue in 2022 was $61,000\$ 61,000, total expenses in 2022 were $35,000\$ 35,000, and Mr. Mansoor made an additional investment of $12,000\$ 12,000 to the business in 2022.
Response: 29000

Studdy Solution

STEP 1

Assumptions
1. Initial total assets on 1/1/2022 are $85,000\$85,000.
2. Initial total liabilities on 1/1/2022 are $17,000\$17,000.
3. Total revenue for the year 2022 is $61,000\$61,000.
4. Total expenses for the year 2022 are $35,000\$35,000.
5. Additional investment by Mr. Mansoor in the year 2022 is $12,000\$12,000.
6. Final total assets on 31/12/2022 are $126,000\$126,000.
7. We need to calculate the total liabilities on 31/12/2022.

STEP 2

First, we need to calculate the owner's equity at the beginning of the year by subtracting the initial total liabilities from the initial total assets.
Owner′s Equitybeginning=Initial Total Assets−Initial Total LiabilitiesOwner's\, Equity_{beginning} = Initial\, Total\, Assets - Initial\, Total\, Liabilities

STEP 3

Now, plug in the given values for the initial total assets and initial total liabilities to calculate the owner's equity at the beginning of the year.
Owner′s Equitybeginning=$85,000−$17,000Owner's\, Equity_{beginning} = \$85,000 - \$17,000

STEP 4

Calculate the owner's equity at the beginning of the year.
Owner′s Equitybeginning=$85,000−$17,000=$68,000Owner's\, Equity_{beginning} = \$85,000 - \$17,000 = \$68,000

STEP 5

Next, we need to calculate the net income for the year by subtracting the total expenses from the total revenue.
Net Income=Total Revenue−Total ExpensesNet\, Income = Total\, Revenue - Total\, Expenses

STEP 6

Plug in the values for the total revenue and total expenses to calculate the net income.
Net Income=$61,000−$35,000Net\, Income = \$61,000 - \$35,000

STEP 7

Calculate the net income.
Net Income=$61,000−$35,000=$26,000Net\, Income = \$61,000 - \$35,000 = \$26,000

STEP 8

Now, we need to calculate the owner's equity at the end of the year by adding the net income and additional investment to the owner's equity at the beginning of the year.
Owner′s Equityend=Owner′s Equitybeginning+Net Income+Additional InvestmentOwner's\, Equity_{end} = Owner's\, Equity_{beginning} + Net\, Income + Additional\, Investment

STEP 9

Plug in the values for the owner's equity at the beginning of the year, net income, and additional investment to calculate the owner's equity at the end of the year.
Owner′s Equityend=$68,000+$26,000+$12,000Owner's\, Equity_{end} = \$68,000 + \$26,000 + \$12,000

STEP 10

Calculate the owner's equity at the end of the year.
Owner′s Equityend=$68,000+$26,000+$12,000=$106,000Owner's\, Equity_{end} = \$68,000 + \$26,000 + \$12,000 = \$106,000

STEP 11

Finally, we need to calculate the total liabilities at the end of the year by subtracting the owner's equity at the end of the year from the final total assets.
Total Liabilitiesend=Final Total Assets−Owner′s EquityendTotal\, Liabilities_{end} = Final\, Total\, Assets - Owner's\, Equity_{end}

STEP 12

Plug in the values for the final total assets and the owner's equity at the end of the year to calculate the total liabilities at the end of the year.
Total Liabilitiesend=$126,000−$106,000Total\, Liabilities_{end} = \$126,000 - \$106,000

STEP 13

Calculate the total liabilities at the end of the year.
Total Liabilitiesend=$126,000−$106,000=$20,000Total\, Liabilities_{end} = \$126,000 - \$106,000 = \$20,000
The total liabilities on 31/12/2022 are 20000.

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