Gibbs Company has $16,000 in Retained Earnings, $27,000 in Assets, and $5,000 in Liabilities. How much is in Common Stock?
A) $22,000
B) $16,000
C) $11,000
D) $6,000

Question

Quizplus · Accepted Answer

The accounting equation is Assets = Liabilities + Equity. Equity consists of Common Stock and Retained Earnings. Here, $27,000 (Assets) = $5,000 (Liabilities) + Common Stock + $16,000 (Retained Earnings). Solving for Common Stock gives $6,000.

Gibbs Company Has $16,000 in Retained Earnings, $27,000 in Assets