Maddux, Inc., has completed its fiscal year and reported the following information. The company had current assets of $153,413, net fixed assets of $412,331, and other assets of $7,822. The firm also has current liabilities worth $65,314, long-term debt of $178,334, and common stock of $162,000. What is the amount of retained earnings?
A) $405,648
B) $243,648
C) $167,918
D) $573,566

Question

Quizplus · Accepted Answer

To find the retained earnings, we first calculate the total assets and total liabilities and equity, then use the accounting equation: Assets = Liabilities + Stockholders' Equity. Total assets = Current assets + Net fixed assets + Other assets = $153,413 + $412,331 + $7,822 = $573,566. Total liabilities and equity = Current liabilities + Long-term debt + Common stock + Retained earnings. We rearrange the equation to solve for retained earnings: Retained earnings = Total assets - (Current liabilities + Long-term debt + Common stock) = $573,566 - ($65,314 + $178,334 + $162,000) = $167,918.