The following information was obtained from the financial statements of Firm A:
Current assets = $4,500 -
Current liabilities = $3,000 -
Long-range assets = $150,000 -
Long-term liabilities = $42,000 -
Contributed capital = $31,000 -
Then, the retained earnings of the firm equal ________.
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A. B. C. D.C
Total assets = Total liabilities + Total Equity
Total Equity = Retained earnings + contributed capital.
Total assets = $4,500+$150,000 = $154,500.
Total liabilities = $42,000+$3,000 = $45,000, hence,
Total equity = $154,500-$45,000 = $109,500
Retained earnings = $109,500-$31,000 = $78,500