Question

Midyear on July 31st, the Chester Corporation's balance sheet reported:

Total Liabilities of $128.230 million
Cash of $10.050 million
Total Assets of $211.436 million
Total Common Stock of $6.350 million.

What were the Chester Corporation's retained earnings?
Select: 1
$99.606 million
$86.906 million
$89.556 million
$76.856 million

Answer 1

Answer:

$76.856 million

Explanation:

As we know that Balance sheet is divided in two portions.

1. Total Assets (Current Assets + Fixed Assets)

2. Total Liabilities and Share Holders' Equity.

and they both should be equal. So we can write from the above information, as:

Total Assets = Total Liabilities + Total Common Stock + Retained Earnings

N.B. We are excluding Cash from our calculation cause we assume that Cash is already been included in Total Assets.

Hence, by putting the values in above equation we can find our Retained Earnings as:

Retained Earnings + $128.230 million + $6.350 million = $211.436 million

Retained Earnings + $134.58 million = $211.436 million

Retained Earnings = $211.436 million - $134.58 million

Retained Earnings = $76.856 million