The balance sheet for Raymond Company shows total assets of $4,000,liabilities of $1,500,and retained earnings of $1,200.Based on this information,the amount of common stock must be
A) $1,300.
B) $5,500.
C) $4,200.
D) $1,700.

Question

Quizplus · Accepted Answer

The balance sheet equation is Assets = Liabilities + Owner's Equity. In this case, Assets = $4,000, Liabilities = $1,500, and Retained Earnings = $1,200. Therefore, Owner's Equity = $4,000 - $1,500 - $1,200 = $1,300. Since the only component of Owner's Equity listed is Common Stock, the amount of Common Stock must be $1,300.

The Balance Sheet for Raymond Company Shows Total Assets of $4,000,liabilities