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Jefferson Handyman Services has total assets for the year of $11,200 and total liabilities of $6,000.

Requirements:
1. Use the accounting equation to solve for equity.
2. If next year assets increased by $3,500 and equity decreased by $2,940, what would be the amount of total liabilities for Jefferson Handyman Services?

Requirement 1:
Use the accounting equation to solve for equity. Begin by solving for the accounting equation. Then use the formula to solve for equity.

Requirement 2:
If next year assets increased by $3,500 and equity decreased by $2,940, what would be the amount of total liabilities for Jefferson Handyman Services?

Answer :

The amount of total liabilities for Jefferson Handyman Services next year would be $12,440.

To solve for equity using the accounting equation, we can use the formula: Equity = Assets - Liabilities.

1. Given that Jefferson Handyman Services has total assets of $11,200 and total liabilities of $6,000, we can substitute these values into the formula:
Equity = $11,200 - $6,000
Equity = $5,200
Therefore, the equity for Jefferson Handyman Services is $5,200.

2. If next year the assets increase by $3,500 and equity decreases by $2,940, we can use the accounting equation to find the amount of total liabilities. Let's assume the new amount of total liabilities is represented by "L."
Assets (increased) = $11,200 + $3,500 = $14,700
Equity (decreased) = $5,200 - $2,940 = $2,260

Now, we can use the accounting equation again to solve for the new total liabilities:
Assets = Liabilities + Equity
Substituting the known values:
$14,700 = L + $2,260
To solve for L, we can subtract $2,260 from both sides of the equation:
L = $14,700 - $2,260
L = $12,440


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