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10 August, 10:51

At the time of liquidation. Fairchild Co. reported assets of $200,000, liabilities of $120,000, common stock of $90,000, and retained earnings of ($10,000). What amount of Fairchild's assets are the shareholders entitled to receive?

A. $200,000

B. $80,000

C. $90,000

D. $100,000

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Answers (1)
  1. 10 August, 11:44
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    B. $80,000

    Explanation:

    Total Asset = $200,000

    Total Liabilities = $120,000

    Shareholders are entitle to receive the assets net of liabilities as follows:

    Total Net Asset = Total Assets - Total liabilities

    Total Net Asset = $200,000 - $120,000

    Total Net Asset = $80,000

    $80,000 of Fairchild's assets are the shareholders entitled to receive.
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