Question

Kingston Company reported total assets of $ 11 million and total liabilities of $ 4 million...

Kingston Company reported total assets of $ 11 million and total liabilities of $ 4 million at the end of 20 Upper X 0. Requirements 1. Construct the balance sheet equation for Kingston Company at the end of 20 Upper X 0 and include the correct amount for​ owners' equity. 2. Suppose that during January 20 Upper X 1 Kingston borrowed $ 2 million from Constellation Bank. How would this affect Kingston's ​assets, liabilities, and​ owners' equity?

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Homework Answers

Answer #1

1)

Balance Sheet Equation

Assets - Liabilities = Owner's Equity

11 Million - 4 Million =7 million

2)

As Kingston company has borrowed $2 million so Assets will increase by $2 million as Cash will come in the company which is a form of Asset

Liablities will increase by $2 million as they have borrowed the money from the bank wihich is a loan

In owner's equity there will be No effect which can be proved from the accounting equation as well.

Asset - Liablities = Owner's equity

Increase by $2 million - Increase by $2 million = No effect

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