Below are SOME of the accounts for Linh Do Accounting Firm prepared at the year ended 30th June 2023 . Calculate the Total Equity as at 30th June 2023.

Accounts receivable 6,108
Contributed Capital 22,677
Sales Revenue 57,272
Equipment 8,913
Unearned Sales Revenue 8,916
Dividends 9,502
Cost of sales 6,506
Accounts payable 5,017
Salary payable 3,541
Operating expenses 5,071
Retained earnings, 30 June 2022 4,709
Retained earnings, 30 June 2023 10,992
Bank loan 6,336

Question

Below are SOME of the accounts for Linh Do Accounting Firm prepared at the year ended 30th June 2023 . Calculate the Total Equity as at 30th June 2023.

Accounts receivable	6,108
Contributed Capital	22,677
Sales Revenue	57,272
Equipment	8,913
Unearned Sales Revenue	8,916
Dividends	9,502
Cost of sales	6,506
Accounts payable	5,017
Salary payable	3,541
Operating expenses	5,071
Retained earnings, 30 June 2022	4,709
Retained earnings, 30 June 2023	10,992
Bank loan	6,336

BlackTom AI · Accepted Answer

First, restate the key values that matter for Total Equity. We have Contributed Capital = 22,677 and Retained earnings as at 30 June 2023 = 10,992. Other items listed include revenue and expense accounts, dividends, various liabilities, and assets, but equity is specifically the residual interest of owners, which is the sum of contributed capital and retained earnings (assuming no additional owner investments or drawings beyond what is given).

Next, consider the effect of dividends. Dividends reduce retained earnings when they are paid, but the figure labeled "Retained earnings, 30 June 2023" already reflects that reduction. Therefore, you should not add or subtract dividends separately from retained earnings here; use the 2023 retained earnings figure directly in the equity calculation.

Now perform the calculation by combining the components of equity:
- Contributed capital: 22,677
- Retained earnings (30 June 2023): 10,992

Total Equity = Contributed capital + Retained earnings = 22,677 + 10,992

Carry out the addition step by step: 22,677 plus 10,000 equals 32,677; adding the remaining 992 gives 33,669.

To confirm consistency, note that other presented numbers (assets, revenues, expenses, other liabilities) are useful for a broader view of the business’s financial position, but they do not alter the owners’ equity calculation when the problem provides explicit equity components.

Therefore, the calculated Total Equity at 30 June 2023 corresponds to 33,669. The line of reasoning hinges on using contributed capital and the ending retained earnings, and recognizing that dividends are already reflected in the ending retained earnings figure.

BACC012 Week 3: Practice Quiz

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