A Company has $15,000 of retained earnings, $26,000 of assets, and $6,000 of liabilities. How much is contributed capital?

Question

Quizplus · Accepted Answer

Contributed capital is the capital that has been brought in by the shareholders or investors. It includes common stock, preferred stock, and additional paid-in capital. 
To calculate it, we use the accounting equation: 
Assets = Liabilities + Contributed Capital + Retained Earnings 
Given: 
Retained Earnings = $15,000 
Assets = $26,000 
Liabilities = $6,000 
We can rearrange the equation as: 
Contributed Capital = Assets - Liabilities - Retained Earnings 
Contributed Capital = $26,000 - $6,000 - $15,000 
Contributed Capital = $5,000 
Therefore, the contributed capital is $5,000, so the best choice is C.

A Company Has $15,000 of Retained Earnings, $26,000 of Assets