Leary Corporation's end-of-year balance sheet consisted of the following amounts: ? $\begin{array} { l r l r } \text { Cash } & \$ 25,000 & \text { Accounts receivable } & \$ 46,000 \\\text { Property, plant, and equipment } & 69,000 & \text { Long-term debt } & 41,000 \\\text { Capital stock } & 107,000 & \text { Accounts payable } & 22,000 \\\text { Retained earnings } & ? & \text { Inventory } & 33,000\end{array}$ ?
What is Leary's retained earnings balance at the end of the current year?

Question

Leary Corporation's end-of-year balance sheet consisted of the following amounts: ?

\begin{array} { l r l r } \text { Cash } & \$ 25,000 & \text { Accounts receivable } & \$ 46,000 \\\text { Property, plant, and equipment } & 69,000 & \text { Long-term debt } & 41,000 \\\text { Capital stock } & 107,000 & \text { Accounts payable } & 22,000 \\\text { Retained earnings } & ? & \text { Inventory } & 33,000\end{array}

?
What is Leary's retained earnings balance at the end of the current year?

Quizplus · Accepted Answer

To find the retained earnings, we first calculate the total assets and total liabilities and equity, excluding retained earnings. Total assets = Cash + Accounts receivable + Property, plant, and equipment + Inventory = $25,000 + $46,000 + $69,000 + $33,000 = $173,000. Total liabilities and equity, excluding retained earnings = Long-term debt + Capital stock + Accounts payable = $41,000 + $107,000 + $22,000 = $170,000. The difference between total assets and the sum of liabilities and equity (excluding retained earnings) gives the retained earnings: $173,000 - $170,000 = $3,000.

Leary Corporation's End-Of-Year Balance Sheet Consisted of the Following Amounts