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    thara williams's Avatar
    thara williams Posts: 2, Reputation: 1
    New Member
    		  
    #1

    Jan 3, 2010, 05:58 PM
    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?
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
    Uber Member
    		  
    #2

    Jan 4, 2010, 09:36 PM

    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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