Final answer:
Using the accounting equation, we find that the Algonquin Company has retained earnings of $13,000, which is calculated by subtracting common stock from the total equity derived from the difference between assets and liabilities.
Step-by-step explanation:
The calculation of retained earnings in the provided scenario involves using the fundamental accounting equation: Assets = Liabilities + Equity. In this case, equity comprises common stock and retained earnings. The balance sheet provided gives us assets of $50,000, liabilities of $22,000, and common stock of $15,000. With these figures, we first calculate total equity by rearranging the equation to Equity = Assets - Liabilities, which gives us $50,000 - $22,000 = $28,000. The amount of retained earnings is then found by subtracting the common stock from the total equity: $28,000 - $15,000 = $13,000. Therefore, the amount of retained earnings would be $13,000.