Palm Textile Corporation had the following balance sheet accounts and balances: $\begin{array}{lrlr}
\text { Accounts Payable } & \$ 12,000 & \text { Common Stock } & ? \
\text { Accounts Receivable } & 2,000 & \text { Equipment } & \$ 14,000 \
\text { Building } & ? & \text { Land } & 14,000 \
\text { Cash } & 6,000 & \text { Retained Earnings } & 4,000
\end{array}$ If the balance of the Building account were $30,000 and if the equipment were sold for $14,000 cash,what would be the total of stockholders' equity?
A) $54,000
B) $32,000
C) $30,000
D) $66,000

Question

Quizplus · Accepted Answer

Stockholders' equity is calculated as Assets - Liabilities. Assets = Cash ($6,000 + $14,000 from equipment sale) + Accounts Receivable ($2,000) + Building ($30,000) + Land ($14,000) = $66,000. Liabilities = Accounts Payable ($12,000). Stockholders' equity = $66,000 - $12,000 = $54,000.

Palm Textile Corporation Had the Following Balance Sheet Accounts and Balances