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jahubb
Jan 15, 2008, 01:09 PM
If a company has assets of $350,000, liabilities of $310,000, and retained earnings of $180,000, investments by owners must be?
A. $40,000
B. $225,000
C. $295,000
D. $310,000
I answered D. my answer was wrong. Can someone please tell me what I did wrong.
Thank You in advance

pready
Jan 17, 2008, 12:32 PM
The Accounting equation is:

Assets = Liabilities + Owners Equity
Therefore:

$350,000 Assets - $310,000 Liabilities = Owners Esquity

Owners Equity = $40,000

jahubb
Jan 17, 2008, 10:48 PM
Thank You, I figured it out, It was the wording, Investments vs. Owners Equity. I feel really stupid. Thank You