Madrid Company has provided the following data (ignore income taxes): 2019 revenues were $77,500.
2019 net income was $33,900.
Dividends declared and paid during 2019 totaled $5,700.
Total assets at December 31,2019 were $217,000.
Total stockholders' equity at December 31,2019 was $123,000.
Retained earnings at December 31,2019 were $83,000.
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Which of the following is correct?

Question

Quizplus · Accepted Answer

We can use the accounting equation to calculate the total expenses:
Total Assets = Total Liabilities + Stockholders' Equity
Stockholders' Equity = Common Stock + Retained Earnings
Total Liabilities = Total Assets - Stockholders' Equity
Total Liabilities = $217,000 - $123,000 = $94,000

Therefore, choice B is incorrect.

We can also use the following formula to calculate Retained Earnings:
Retained Earnings = Net Income - Dividends Declared + Beginning Retained Earnings
$83,000 = $33,900 - $5,700 + Beginning Retained Earnings
Beginning Retained Earnings = $83,000 - $28,200 = $54,800

Therefore, choice C is correct.

We cannot determine the value of Common Stock with the given information, so choice D is incorrect.

To calculate Total Expenses, we can use the following formula:
Total Expenses = Revenues - Net Income
Total Expenses = $77,500 - $33,900 = $43,600

Therefore, choice A is incorrect.

Madrid Company Has Provided the Following Data (Ignore Income Taxes)