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21 August, 02:32

Kolander Company has the following accounts and balances at the end of the year:

Longminus Term Notes Payable $59,000

Interest Payable $5,500

Accounts Receivable $30,000

Land $42,000

Accounts Payable $38,000

Shortminus term Investments $7,000

Building $59,000

Income Taxes Payable $10,000

Cash and Cash Equivalents $80,000

Equipment $64,500

Common Stock $127,000

Supplies $6,000

What is the amount of Retained Earnings at the end of the year?

a. $177,000

b. $54,000

c. $113,500

d. $167,500

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Answers (1)
  1. 21 August, 03:24
    0
    The correct answer is $ 49,000. (which is not in options)

    Explanation:

    This problem requires us to calculate value of retain earning at the end of the year. We know that assets = equity + liabilities and equity = common stock + retain earning. Following this rule we can easily calculate amount of retain earning. Detail Calculation is given below.

    Asset

    Accounts Receivable $30,000

    Land $42,000

    Investments $7,000

    Building $59,000

    Cash and Equivalents $80,000

    Equipment $64,500

    Supplies $6,000

    Total Asset $288,500

    Less

    Liability

    Notes Payable $59,000

    Interest Payable $5,500

    Income Taxes Payable $10,000

    Accounts Payable $38,000

    Total Liabilities $112,500

    Less

    Equity

    Common Stock $127,000

    Retain earning $ 49,000
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