An incomplete balance sheet for Software Square Company is presented below:

Software Square Company
Balance Sheet
March 31, 2002

Assets Liabilities and Stockholders' Equity

Cash $ ? Notes payable $45,000
Accounts receivable 10,000
Building 50,000
Stockholders' equity
Capital stock $ ?
Retained earnings 11,000

If the firm issued capital stock for cash in the amount of $70,000, then the cash on hand must be :

a. $65,000
b. $66,000
c. $70,000
d. $115,000
e. Cannot be determined from the above information.

I think the answer is 70,000...Am I correct

The answer is B.

The capital stock is your contributed capita, and therefore, to make it balance, you have;

Assets
Cash $ ?
Accounts receivable 10,000
Building 50,000
Total assets less cash = 60,000

Liabilities
Notes payable $45,000

Stockholders' equity
Capital stock 70,000
Retained earnings 11,000
Total liabilities and S/E = 126,000

Therefore, if you subtract.. 126,000-60,000 = 66,000

I agree, B 66,000