Question

As of December 31, Year 1, Moss Company had total cash of $147,000, notes payable of $84,700, and common stock of $51,500. During Year 2, Moss earned $27,000 of cash revenue, paid $15,500 for cash expenses, and paid a $2,100 cash dividend to the stockholders. Requireda. Determine the amount of retained earnings as of December 31, Year 1.b.

Answer 1

Answer:

$10,800

Explanation:

Given that,

Total cash = $147,000

Notes payable = $84,700

Common stock = $51,500

Cash revenue earned = $27,000

Cash expenses paid = $15,500

Cash dividend paid = $2,100

Accounting equation is as follows:

Assets = Liabilities + Stockholder's equity

cash = Notes payable + common stock + Retained earnings

$147,000 = $84,700 + $51,500 + Retained earnings

Retained earnings = $147,000 - $84,700 - $51,500

                               = $10,800