Question

Using the expanded accounting equation, solve for the missing amount

Assets = $84,325
Liabilities = $2,560
Common Stock = ?
Dividends = $13,450
Revenues = $54,780
Expenses = $28,125

Answer 1

The expanding accounting equation is:

Assets = Liabilities + Stockholders Equity

[Common Stock + Retained Earnings]

(Revenues - Expenses - Dividends)

Now, we replace the amounts in the formula

$84,325 = $2,560 + X

[ X + R ]

($54,780 - $28,125 - $13,450)

$84,325 = $2,560 + X

[ X + R ]

($54,780 - $28,125 - $13,450)

$84,325 = $2,560 + X

[ X + $13,205 ]

$84,325 = $2,560 + X

[ 68,560 + $13,205 ]

$84,325 = $2,560 + $81,765

Both sides are now equal to $84,325

Thus, Common Stock = $68,560