Question

Marvin Services Corporation had the following accounts and balances: Accounts payable $ 6,000 Accounts receivable 8,000 Cash 7,000 Common stock 15,000 Equipment 44,000 Notes payable 8,000 Prepaid insurance 4,000 Retained earnings Not given Supplies 2,000 Unearned service revenue 3,000 What is the balance of the company's retained earnings account? $34,000 $28,000 $46,000 $26,000 $33,000

Answer 1

Answer:

The balance of the company's retained earnings account is $33,000

Explanation:

The computation of retained earning balance is shown below:

= Assets - Liabilities - shareholder equity

where,

Assets = Accounts receivable + Cash + equipment + prepaid insurance + supplies

= $8,000 + $7,000 + $44,000 + $4,000 + $2,000

= $65,000

Liabilities = Accounts payable + notes payable + unearned service revenue

               = $6,000 + $8,000 + $3,000

               = $17,000

And, the common stock is $15,000

Now put these values to the above formula

So, the answer would be equal to

= $65,000 - $17,000 - $15,000

= $33,000