On January 1, Lumia Company’s liabilities are $60,000 and its equity is $40,000. On January 3, Lumia purchases and installs solar panel assets costing $10,000. For the panels, Lumia pays $4,000 cash and promises to pay the remaining $6,000 in six months. What is the total of Lumia’s assets after the solar panel purchase?

The total assets available in the statements of the Lumia Company after the purchase of solar panel will be $106,000. as the remaining $6000 were added in the bills payable side of the liabilities in the balance sheet.

The calculation of the balance sheet is based on simple equation that the assets of the company are a summation of liabilities along with the equities of the company as on that date.

The formula for calculation of Assets is known to us as,

[tex]\rm Assets= Liabilities\ + Equities[/tex]

It is given to us that the liabilities of the Lumia Co. are $60000 and the equities of the company stand at $40000 so by putting the values in the formula above we get,

[tex]\rm Assets\ Before\ Purchase\ of\ Solar\ Panel = 40000+60000[/tex]

So, the assets before the purchase of solar panel were $100,000. We know that the solar panel was purchased for $10000 for which $4000 was paid in cash and the remaining stood as bills payable.

The equation to solve this would be that in the assets side solar panel heads will show a positive balance of $10000 and a negative $4000 in cash in hand. Total assets will amount to $106,000.

Whereas on the liabilities side bills payable will have a positive balance of $6000 which would make the total liabilities of the company as $66,000. Now, putting the values in the formula again we get,

[tex]106000=66000+40000[/tex]

Assets match the summation of liabilities and the equities of the company and the balance sheet has tallied.

Hence, the total assets of Lumia Co. after the purchase of Solar panel will be $106,000.

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