Question

The following items were taken from the accounting records of a company. Accounts Payable 57,000 Long-term investments 35,000 Accounts Receivable 32,000 Trademarks 6,000 Building 255,000 Accrued Expenses 9,000 Cash 15,000 Short-term Notes Payable 35,000 Equipment 76,000 Common Stock 1,000 Retained Earnings ?? Interest Income 2,000 Prepaid Expenses 12,000 Inventory 82,000 Sales 123,000 Dividends paid 25,000 Salary Expense 22,000 Cost of Goods Sold 62,000

Answer 1

Answer:

Retained earnings balance is $411,000. (assuming the numbers stated in the question were in $)

Explanation:

Retained earnings is the accumulated earnings of an organization over time. It is an integral part of the owners equity in the balance sheet. The accounting equation gives the relationship between all he elements of the balance sheet and may be stated as

assets = liabilities + owner's equity

Given (assume all amounts are stated in $);

Accounts Payable = 57,000

Long-term investments = 35,000

Accounts Receivable = 32,000

Trademarks = 6,000

Building = 255,000

Accrued Expenses = 9,000

Cash = 15,000

Short-term Notes Payable = 35,000

Equipment = 76,000

Common Stock = 1,000

Retained Earnings ??

Interest Income = 2,000

Prepaid Expenses = 12,000

Inventory = 82,000

Sales = 123,000

Dividends paid = 25,000

Salary Expense = 22,000

Cost of Goods Sold = 62,000

Total assets = 82,000 + 12,000 + 76,000 + 15,000 + 255,000 + 6,000 + 35,000 + 32,000 = 513,000

Total liabilities = 57,000 + 9,000 + 35,000 = 101,000

Total equity = 513,000  - 101,000

= 412,000

Retained earnings = 412,000 - 1,000 = 411,000

Assumptions made is that the balances given were as at the end of the period.