The owner's equity of Logan's company is equal to one quarter of the total assets. Liabilities equal $60,000. What is the amount of owner's equity?
1000
To find the amount of owner's equity, we need to consider two things: the total assets and the liabilities.
Given that the liabilities are $60,000, we can assume that this amount represents the total amount of assets minus the owner's equity. Mathematically, it can be expressed as:
Total Assets - Owner's Equity = Liabilities
Now, we are also given that the owner's equity is equal to one quarter (1/4) of the total assets:
Owner's Equity = 1/4 * Total Assets
We can rewrite this equation as:
Total Assets = 4 * Owner's Equity
Substituting this expression for Total Assets in the earlier equation, we get:
4 * Owner's Equity - Owner's Equity = Liabilities
3 * Owner's Equity = Liabilities
Now, all we need to do is plug in the value of liabilities ($60,000) into this equation and solve for Owner's Equity:
3 * Owner's Equity = $60,000
Dividing both sides of the equation by 3:
Owner's Equity = $60,000 / 3
Owner's Equity = $20,000
Therefore, the amount of owner's equity is $20,000.