Albert Company reported the following statement of financial position amounts at December 31,20B: What was the total amount of retained earnings on December 31,20B?
A)$20,000
B)$30,000
C)$40,000
D)$50,000

Question

Quizplus · Accepted Answer

Retained earnings can be calculated by subtracting accumulated depreciation, notes payable and accounts payable from total shareholders' equity. 
$70,000 (total shareholders' equity) - $20,000 (accumulated depreciation) - $5,000 (notes payable) - $5,000 (accounts payable) = $40,000 (retained earnings). Therefore, the answer is choice C.

Albert Company Reported the Following Statement of Financial Position Amounts