Leary Corporation's end-of-year balance sheet consisted of the following amounts:

$$\begin{array} { l r l r }
\text { Cash } & \$ 25,000 & \text { Accounts receivable } & \$46,000 \
\text { Property, plant, and } &69,000 & \text { Long-term debt } & 41,000 \
\text { equipment } & & & \
\text { Capital stock } & 107,000 & \text { Accounts payable } & 22,000 \
\text { Retained earnings } & ? & \text { Inventory } & 33,000
\end{array}$$
- What is Leary's retained earnings balance at the end of the current year?
A)$10,000
B)$3,000
C)$66,000
D)$110,000

Question

Leary Corporation's end-of-year balance sheet consisted of the following amounts:  
 
$$\begin{array} { l r l r } 
\text { Cash } & \$ 25,000 & \text { Accounts receivable } & \$46,000 \
\text { Property, plant, and } &69,000 & \text { Long-term debt } & 41,000 \
\text { equipment } & & & \
\text { Capital stock } & 107,000 & \text { Accounts payable } & 22,000 \
\text { Retained earnings } & ? & \text { Inventory } & 33,000
\end{array}$$
- What is Leary's retained earnings balance at the end of the current year?
A)$10,000
B)$3,000
C)$66,000
D)$110,000

Quizplus · Accepted Answer

To find the retained earnings, we first calculate the total assets and total liabilities and equity, excluding retained earnings. Total assets = Cash + Accounts receivable + Property, plant, and equipment + Inventory = $25,000 + $46,000 + $69,000 + $33,000 = $173,000. Total liabilities and equity (excluding retained earnings) = Long-term debt + Capital stock + Accounts payable = $41,000 + $107,000 + $22,000 = $170,000. The difference between total assets and the sum of liabilities and equity (excluding retained earnings) gives the retained earnings: $173,000 - $170,000 = $3,000.

Leary Corporation's End-Of-Year Balance Sheet Consisted of the Following Amounts