Question

Marvin Services Corporation had the following accounts and balances: Accounts payable $ 6,000 Accounts receivable 8,000 Cash 7,000 Common stock 15,000 Equipment 44,000 Notes payable 8,000 Prepaid insurance 4,000 Retained earnings Not given Supplies 2,000 Unearned service revenue 3,000 What is the balance of the company's retained earnings account? $34,000 $28,000 $46,000 $26,000 $33,000

Answer 1

To find Marvin Services Corporation's retained earnings, we calculate total assets and subtract total liabilities and common stock from them. The calculation shows that the retained earnings for the corporation is $33,000.

Step-by-step explanation:

To determine the balance of Marvin Services Corporation’s retained earnings, we must apply the accounting equation which states that Assets = Liabilities + Shareholders' Equity. Since retained earnings is a part of shareholders' equity, we can rearrange this equation to solve for retained earnings: Retained Earnings = Assets - Liabilities - Common Stock.

The total assets are calculated as the sum of cash, accounts receivable, supplies, prepaid insurance, and equipment, which equals $7,000 + $8,000 + $2,000 + $4,000 + $44,000 = $65,000.

Total liabilities are the sum of accounts payable, notes payable, and unearned service revenue, totaling $6,000 + $8,000 + $3,000 = $17,000.

Subtracting the total liabilities and common stock from total assets gives us the retained earnings: $65,000 - $17,000 - $15,000 = $33,000.

Answer 2

The balance of the company's retained earnings account is $33,000

Step-by-step explanation:

The computation of retained earning balance is shown below:

= Assets - Liabilities - shareholder equity

where,

Assets = Accounts receivable + Cash + equipment + prepaid insurance + supplies

= $8,000 + $7,000 + $44,000 + $4,000 + $2,000

= $65,000

Liabilities = Accounts payable + notes payable + unearned service revenue

= $6,000 + $8,000 + $3,000

= $17,000

And, the common stock is $15,000

Now put these values to the above formula

So, the answer would be equal to

= $65,000 - $17,000 - $15,000

= $33,000