Question

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

Answer 1

The balance of retained earning is $210,000

Step-by-step 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