Question

The financial statements of Calloway Company prepared at the end of the current year contained the following elements and corresponding amounts: Assets = $39,000; Liabilities = ?; Common Stock = $6,900; Revenue = $14,800; Dividends = $1,700; Beginning Retained Earnings = $4,700; Ending Retained Earnings = $8,900.

Answer 1

Answer:

Total liabilities is $23,200

Explanation:

In this question,we apply the accounting equation which is shown below:

Total assets = Total liabilities + shareholder's equity

$39,000 = Total liabilities + $6,900 + $8,900

$39,000 = Total liabilities + $15,800

So, the total liabilities equal to

= $39,000 - $15,800

= $23,200

The shareholder's equity includes Common Stock and the ending retained earning balance and the same we take in the computation part.