Question

Pharoah Company compiled the following financial information as of December 31, 2022:

Service revenue $1171000
Common stock 233000
Equipment 319000
Salaries and wages expense 390000
Rent expense 97500
Depreciation expense 487500
Cash 276000
Dividends 83000
Supplies 39000
Accounts payable 155000
Accounts receivable 110000
Retained earnings, 1/1/22 567000

Pharoah's total assets at December 31, 2022 are: _________.

Answer 1

Answer: $913000

Step-by-step explanation:

The net income must be calculated first. This will be:

Net income = Service revenue – (Salaries + Rent + Depreciation)

= 1171000 - (390000+97500+487500)

= 1171000 - 975000

= $196000

Now, the retained earnings has to be calculated. This will be:

Retained earnings (31/12/2022) = Beginning + Net income – Dividends

= 567000+196000-83000

= $680000

Now, the tockholders’ equity will be:

Stockholders’ equity= Common stock+Retained earnings(31/12/2022)

= $233000+$680000

= $913000