Need help, new to Accounting

[samgoku79]

The fundamental accounting equation for Diamond Towing is as follows:
Assets ($137,254) = Liabilities ($27,345) + Owner’s Equity ($109,909)

When the business closed down, assets of $88,000 were sold for $55,500; assets of $29,605 were sold for 73,987; the remaining assets stayed the same.
What is the new equation?

 

[BIG E]

You're not telling us the composition of the assets being sold in which sale - breakdown of fixed assets with accumulated depreciation, intangible assets is needed.

 

[samgoku79]

It's not given. This was given as exercise. I came up with the answer:
Assets $ 149,136= Liabilities $ $27345 + Equity $121,791
Computed Assets amount sold. For the Assets gain and loss I added them to Equity therefore deriving to that amount.

 

[Fidget]

That's correct. You're basically adjusting assets & equity by the net amount of the disposals.

 

[samgoku79]

Thanks for doing the balance sheet to illustrate it as well. Was researching last night on where to record the assets gain and loss on the balance sheet and how to show a balance equation. Pheww, been awhile since I last deal with numbers and problems. Accounting terms are also intimidating. Appreciate your help

 

[Fidget]

No worries! Just be mindful that gains/losses on disposal usually go through the P&L and find their way to equity via retained earnings - they don't feature as a gain/loss item on the balance sheet. In this case there is no P&L as the business has closed down, so it's just balance sheet adjustments to assets & equity.

I should've labelled the bottom line of the workings as 'movement on total assets' rather than gain/loss on disposal because I think it's misleading to have anybody think gains/losses on disposal go on the balance sheet.