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16 April, 01:43

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

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  1. 16 April, 03:35
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    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.
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