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9 February, 15:53

Kangaroo Company had the following amounts on its balance sheet as of December 31, 2018: Inventory $325,000 Notes Payable 100,000 Cash 150,000 Common Stock 750,000 Net Property, Plant, & Equipment 600,000 Accounts Receivable 30,000 Accounts Payable 45,000 Retained Earnings? What is the balance of retained earnings? 210,000 180,000 310,000 750,000

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  1. 9 February, 16:26
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    The balance of retained earning is $210,000

    Explanation:

    In this question, we have to apply the accounting equation which is shown below:

    Total assets = Total liabilities + shareholder's equity

    where,

    Total assets = Inventory + Cash + Net Property, Plant, & Equipment + Accounts Receivable

    = $325,000 + $150,000 + $600,000 + $30,000

    = $1,105,000

    Total liabilities = Notes payable + account payable

    = $100,000 + $45,000

    = $145,000

    And, the shareholder equity = Common stock + retained earnings

    Now put these values to the above formula

    So, the answer would be equal to

    $1,105,000 = $145,000 + $750,000 + retained earnings

    $1,105,000 = $895,000 + retained earnings

    So, retained earnings = $210,000
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