Final answer:
The retained earnings for Kiner Company are calculated by subtracting total liabilities and capital stock from total assets. With the provided figures, retained earnings amount to $86,000. A balance sheet would list this under owner's equity, balancing the total assets against the sum of liabilities and owner's equity.
Step-by-step explanation:
To compute the retained earnings for Kiner Company, we need to apply the accounting equation: Assets = Liabilities + Owner's Equity. Retained earnings fall under Owner's Equity, and with the given items, we can figure it out by rearranging the equation as Owner's Equity = Assets - Liabilities. Owner's Equity consists of Capital Stock and Retained Earnings, so we'll solve for Retained Earnings by subtracting Capital Stock from Owner's Equity.
First, let's calculate the total assets and total liabilities:
- Total Assets: Cash + Accounts Receivable + Land + Office Equipment + Building = $40,000 + $50,000 + $100,000 + $11,000 + $220,000 = $421,000
- Total Liabilities: Accounts Payable + Notes Payable = $40,000 + $220,000 = $260,000
Now, let’s find the Owner's Equity:
Owner's Equity = Total Assets - Total Liabilities = $421,000 - $260,000 = $161,000
Given the Capital Stock is $75,000, the Retained Earnings would be:
Retained Earnings = Owner's Equity - Capital Stock = $161,000 - $75,000 = $86,000
A prepared balance sheet for Kiner Company would list assets on one side and liabilities and owner's equity (including retained earnings) on the other, showing they balance out.