Question

Midyear on July 31st, the Digby Corporation's balance sheet reported: Total Liabilities of $77.152 million Cash of $6.030 million Total Assets of $125.989 million Total Common Stock of $3.810 million. What were the Digby Corporation's retained earnings

Answer 1

Answer:

$45.027 million

Explanation:

The accounting equation shows the relationship between the various elements of the balance sheet. These are the assets, liabilities and equity. It is given as

Assets = Liabilities + Equity

The owner's equity is made up of the common stock and retained earnings (which is the net income less dividend paid over the period).

Equity = $125.989 million - $77.152 million

= $48.837  million

Retained earnings = Equity - Common stock

= $48.837  million - $3.810 million

= $45.027 million

Digby Corporation's retained earnings is $45.027 million