Sinoyianis Realty Company had the following balance sheet accounts and balances:

-If $6,000 of Accounts Payable were paid in cash,what would be the balance of the Retained Earnings account?

Question

Sinoyianis Realty Company had the following balance sheet accounts and balances:

-If $6,000 of Accounts Payable were paid in cash,what would be the balance of the Retained Earnings account?

Quizplus · Accepted Answer

When $6,000 of Accounts Payable is paid in cash, the asset Cash decreases by $6,000 and the liability Accounts Payable also decreases by $6,000. Therefore, there is no impact on the equity accounts (including Retained Earnings). The balance of Retained Earnings remains the same, which is $30,000 (Total Assets - Total Liabilities = $128,000 - $90,000 = $38,000; Total Equity = $38,000 - $8,000 = $30,000).

Sinoyianis Realty Company Had the Following Balance Sheet Accounts and Balances