Question

Kolander Company has the following accounts and balances at the end of the​ year:

Longminus Term Notes Payable $59,000
Interest Payable $5,500
Accounts Receivable $30,000
Land $42,000
Accounts Payable $38,000
Shortminus term Investments $7,000
Building $59,000
Income Taxes Payable $10,000
Cash and Cash Equivalents $80,000
Equipment $64,500
Common Stock $127,000
Supplies $6,000

What is the amount of Retained Earnings at the end of the​ year?

a. $177,000
b. $54,000
c. $113,500
d. $167,500

Answer 1

The correct answer is $ 49,000. (which is not in options)

Step-by-step explanation:

This problem requires us to calculate value of retain earning at the end of the year. We know that assets = equity + liabilities and equity = common stock + retain earning. Following this rule we can easily calculate amount of retain earning. Detail Calculation is given below.

Asset

Accounts Receivable $30,000

Land $42,000

Investments $7,000

Building $59,000

Cash and Equivalents $80,000

Equipment $64,500

Supplies $6,000

Total Asset $288,500

Less

Liability

Notes Payable $59,000

Interest Payable $5,500

Income Taxes Payable $10,000

Accounts Payable $38,000

Total Liabilities $112,500

Less

Equity

Common Stock $127,000

Retain earning $ 49,000