Question
The following items are extracted from Matta Engineering statement of financial position for the period ended 2022. & (mathrm(E)) Plant and equipment & 2,500 Trade payables & 2,800 Short-term borrowings & 2,000 Overdraft & 600 Inventories & 4,500 Property & 30,000 Long-term borrowings & 5,100 Mortgage & 18,000 Trade receivables & 1,800 What is the total equity for the period? E32,500 E6,300 E28,500 E67,300
Answer
4.1
(362 Votes)
Arabella
Elite · Tutor for 8 years
Answer
Explanation
## Step 1:The first step in solving this problem is to identify the total assets and the total liabilities from the financial statement presented.On inspection, it can be noted that our assets would be the sum of plant and equipment, inventories, property, and trade receivables. While our liabilities would be the sum of trade payables, short-term borrowings, overdraft, long-term borrowings, and mortgage.## Step 2: Then we proceed to sum our total assets (plant and equipment, inventories, property, and trade receivables) and total liabilities (trade payables, short-term borrowings, overdraft, long-term borrowings, and mortgage) individually.In case of total assets,Plant and equipment: £2,500 Inventories: £4,500 Property: £30,000 Trade receivables: £1,800 The total thus is £38,800 In case of total liabilities,Trade payables: £2,800 Short-term borrowings: £2,000 Overdraft: £600 Long-term borrowings: £5,100 Mortgage: £18,000 The total thus is £28,500 ## Step 3: Finally, we calculate totals equity by applying the formula: ### Equity = Total Assets - Total LiabilitiesGiven that we've calculated our Total Assets to be £38,800 and Total Liabilities to be £28,500.Equity then equals £38,800 - £28,500 = £10,300 #