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-   -   What is the equation for finding liabilites for a corporation (https://www.askmehelpdesk.com/showthread.php?t=431080)

  • Jan 3, 2010, 05:58 PM
    thara williams
    what is the equation for finding liabilites for a corporation
    I need to find the missing number for this financial statement:

    Total assets $325,000
    Total liabilities ?
    Paid in capital $40,000
    Retained earnings ?
    Net income $113,000
    Dividends declared and paid during 2009 $65,000
    Retained earnings at the beginning of 01/01/09 $42,000

    How to calculate the missing amounts?
  • Jan 4, 2010, 09:36 PM
    morgaine300

    You need to deal with two things here. One, the accounting equation:
    Assets = Liabilities + Equity
    KNOW THIS EQUATION

    Extended out, it's also assets = liabilities + paid in capital + retained earnings. (That is, I just divided equity between the paid in capital and retained earnings.)

    Also, you need to know what affects retained earnings:
    beginning balance
    + net income
    -dividends declared
    = ending balance

    Plug in everything given in the problem and work towards the missing numbers. Give it a try, and post your results if you want them checked.

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