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If Northland has a debt of $5 million in 2014, and runs a deficit of $0.3 million in 2015, and a surplus of $0.4 million in 2016, what would its debt be at the end of 2016, assuming no additional interest is added to its debt? $5.3 million $4.3 million $4.9 million $5.7 million

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Answer:

The correct answer is:

$4.9 million

Explanation:

To find the debt balance at the end of 2016, we will first group the entries into debit or credit entries from 2014 to 2016, and this is done as follows:

particulars                   debit entry (million dollars)      credit (million dollars)

debt in 2014                                     5                                         -

deficit in 2015                                  0.3                                      -

surplus in 2016                                 -                                        0.4

Total                                                  5.3                                     0.4

Debt balance at the end of 2016 = 5.3 - 0.4 = $4.9 million

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