Question

the balance sheet items of Kiner company as of December 31, current year, follow in random order
Land $ 100,000
Accounts payable $ 40,000
Accounts receivable $ 50,000
Cash $40,000
Office equipment $11,000
Building $ 220,000
Capital stock $75,000
Notes Payable $ 220,000
Compute the amount for retained earnings and prepare a balance sheet for the company

Answer 1

Retained Earnings = $86,000

Accounting Equation…Assets= Liabilities + Owners Equity

Assets (Cash, acct rec, equipment, building, land) = $421,000

Liabilities (Notes payable, accounts payable)= $260,000

Equity (capital stock) = $75,000

Liabilities + Equity= $335,000

Retained Earnings flows into equity

$421,000-$335,000= $86,000

$335,000+86,000= $421,000

So the equation balances.