Cash $10,000 Accounts Payable $7,000
Accounts Receivable $6,400 Mortgage Payable $65,000
Supplies $1,500 Long-term Debt $36,000
Building $150,000 Notes Payable $9,000
Equipment $80,000 Preferred Stock $32,000
Merchandise Inventory $18,000 Retained Earnings ?
Prepaid Rent $3,000
Common Stock $60,000
Retained earnings total:
A. $59,900
B. $78,100
C. $92,000
D. $151,900
A
To determine the retained earnings total, we need to use the accounting equation:
Assets = Liabilities + Equity
First, let's calculate the total equity by summing up the preferred stock, common stock, and retained earnings:
Equity = Preferred Stock + Common Stock + Retained Earnings
Given: Preferred Stock = $32,000
Common Stock = $60,000
Equity = $32,000 + $60,000
Equity = $92,000
Next, let's calculate the total liabilities by summing up all the liabilities:
Liabilities = Accounts Payable + Mortgage Payable + Long-term Debt + Notes Payable
Given: Accounts Payable = $7,000
Mortgage Payable = $65,000
Long-term Debt = $36,000
Notes Payable = $9,000
Liabilities = $7,000 + $65,000 + $36,000 + $9,000
Liabilities = $117,000
Finally, we can use the accounting equation to find the total assets:
Assets = Liabilities + Equity
Assets = $117,000 + $92,000
Assets = $209,000
Now we can determine the retained earnings total:
Retained Earnings = Assets - Liabilities
Retained Earnings = $209,000 - $117,000
Retained Earnings = $92,000
Therefore, the retained earnings total is C. $92,000.