Allentown Corporation has on its statement of financial position the following amounts: Total assets of $3,500,000 and total liabilities of $500,000. Contributed capital had a balance of $1,000,000. What is the amount of retained earnings that should appear on Allentown's statement of financial position?

Question

Quizplus · Accepted Answer

Total assets = total liabilities + stockholders' equity
Stockholders' equity = contributed capital + retained earnings
$3,500,000 = $500,000 + stockholders' equity
Stockholders' equity = $3,000,000
$3,000,000 - $1,000,000 (contributed capital) = $2,000,000 (retained earnings)

Allentown Corporation Has on Its Statement of Financial Position the Following