The trlal balance for K and J Nursery Inc listed the followi

The trlal balance for K and J Nursery, Inc., listed the following account balances at December 31, 2018, the end of its fiscal year: cash, $22,000; accounts recelvable, $17,000; Inventories, $31,000; equipment (net), $86,000, accounts payable, $20,000; wages payable, $8,000; Interest payable, $4,000; note payable (due In 18 months), $36,000; common stock, $62,000. Determine the year-end balance In retained earnings for K and J Nursery, Inc Retained earnings

Solution

Total assets=Cash+AR+Inventory+Equipment

=(22000+17000+31000+86000)=$156000

Total liabilities=AP+Wages payable+Interest payable+Note payable

=(20000+8000+4000+36000)=$68000

Total assets=Total liabilities+Total equity

156000=68000+(Common stock+Retained earnings)

Retained earnings=(156000-68000-62000)

which is equal to

=$26000.