Problem 2187 LO 22 The companys total assets are 37500 The f

Problem 2-187 [LO 2-2] The company\'s total assets are $37,500. The following is a listing of the company\'s accounts and account balances as of December 31, Year 3. This company doesn\'t have any other accounts Accounts Payable Accounts Receivable Supplies Equipment Common Stock Cash Retained Earnings $ 7,300 8,000 1,300 23,500 10,000 Required a. Determine the balance of the Cash account Cash b. Determine the balance of the Retained Earnings account Retained Earnings

Solution

Total assets is given as $37,500

Now, Total assets consists of Accounts receivable, Supplies, Equipment and Cash (as there are no other accounts)

So, $37,500 = Accounts receivable + Supplies + Equipment + Cash

So, $37,500 = $8,000 + $1,300 + $23,500 + Cash

So, Cash = $37,500 - $ 32,800

So, Cash = $ 4,700

Now, as per accounting equation, Total Assets = Total liabilities + Common stock + Retained earnings

So, $37,500 = Accounts payable + Common stock + Retained earnings

So, $37,500 = $7,300 + $10,000 + Retained earnings

So, Retained earnings = $37,500 - $17,300

= $ 20,200