[camaroracr21]

Buddy Inc. has common stock of $10,000, additional paid-in capital of $300,000, cash of $42,000, retained earnings of $55,000, and dividends payable of $27,000. How much is total stockholders' equity?

A) $365,000
B) $434,000
C) $407,000
D) $392,000

In calculating the total owners equity. I already know that you add together the common stock, paid-in capital, and retained earnings. Would the dividends payable be subtracted? Or would it not be counted at all because it is a liability account? Also would cash be added or not calculated for owners equity?

[ArcSine]

Stock + APIC + RE is as far as you need to take it. "Dividends payable" isn't included in the total (as you're guessing); in fact it represents a number that's been recently removed from Stockholders' Equity. The existence of the "divvies payable" balance means that someone has already booked an entry to debit (hence, reduce) RE and credit this liability account, to reflect the declaration of the impending dividend payment, and so, in effect, to carve this amount out of Equity and move it up into the Liabilities section of the Bal Sheet.