At 31 October 2026 Ryan’s Toy Shop has the following assets and liabilities: • Inventory $29 000 • Bank (DR) $5 000 • Accounts Payable $9 000 • Loan - Just Bank $25 000 • Office Furniture $9 000 • Accounts Receivable $13 000 What is the value of Owner’s Equity for Ryan’s Toy Shop at 31 October 2026?

Question

At 31 October 2026 Ryan’s Toy Shop has the following assets and liabilities: •	Inventory $29 000 •	Bank (DR) $5 000 •	Accounts Payable $9 000 •	Loan - Just Bank $25 000 •	Office Furniture $9 000 •	Accounts Receivable $13 000 What is the value of Owner’s Equity for Ryan’s Toy Shop at 31 October 2026?

BlackTom AI · Accepted Answer

To begin, list the items and classify them as assets or liabilities so we can compute Owner’s Equity.

Assets: Inventory 29,000; Bank (DR) 5,000; Accounts Receivable 13,000; Office Furniture 9,000. Total Assets = 29,000 + 5,000 + 13,000 + 9,000 = 56,000.

Liabilities: Accounts Payable 9,000; Loan - Just Bank 25,000. Total Liabilities = 9,000 + 25,000 = 34,000.

Owner’s Equity is computed as Assets minus Liabilities: 56,000 − 34,000 = 22,000.

Now evaluate each answer option:

- Option a: 4,000. This would require a much smaller asset base or much larger liabilities. Since our calculated equity is 22,000, this option is inconsistent with the actual totals provided.

- Option b: 12,000. This reflects a partial miscalculation of assets or liabilities. If someone subtracted liabilities (34,000) from a smaller asset total (46,000, for example), they might land near 12,000, but the asset total here is 56,000, so 12,000 is not correct.

- Option c: 14,000. Similar to option b, this would arise from an incorrect pairing of asset or liability totals. The given numbers do not support an equity of 14,000 when assets sum to 56,000 and liabilities to 34,000.

- Option d: 22,000. This corresponds to the proper computation with the provided figures: 56,000 of assets minus 34,000 of liabilities equals 22,000 of Owner’s Equity. It aligns with the standard accounting equation (Assets = Liabilities + Owner’s Equity).

If you double‑check the classification, note that Bank (DR) indicates an asset balance (debit), consistent with typical asset accounts, not a negative amount. No contra-asset adjustments or unusual balances are indicated here beyond the standard totals.

In summary, the correct value of Owner’s Equity, given the totals, is 22,000, which matches the option labeled 'd. $22 000'.

MUF0021 Accounting Unit 1 - Semester 2, 2025

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