Question

Ending assets for Smith company equal $600,000 and the beginning retained earnings account was $300,000. If net income during the period was $250,000 and dividends were $50,000, what were ending liabilities?

Answer 1

Answer:

The ending liability is $100,000

Explanation:

In this question, we use the accounting equation i.e

Total Assets = Total liabilities + stockholder equity

Since the total assets value are given and by considering the other items which are mentioned in the question we can find the ending balance of retained earnings

So, the ending balance of retained earning =  balance + Net income - dividend

= $300,000 + $250,000 - $50,000

= $500,000

And, the stockholder equity is not given, So the value of ending liability equals to

$600,000 - $500,000 = $100,000