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15 July, 05:09

The following information is provided for Sacks Company before closing entries. Cash $ 12,000 Supplies 4,500 Prepaid rent 2,000 Salaries expense 4,500 Equipment 65,000 Service revenue 30,000 Miscellaneous expenses 20,000 Dividends 3,000 Accounts payable 5,000 Common stock 68,000 Retained earnings 8,000 What is the amount of total shareholders' equity? Multiple Choice a. $5,000. b. $78,500. c. $68,500. d. $83,500.

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  1. 15 July, 08:27
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    b. $78,500

    Explanation:

    Assets

    Equipment $65,000

    Cash $12,000

    Supplies $4,500

    Prepaid rent $2,000

    Total Assets $83,500

    Equity and Liabilities

    Common stock $68,000

    Retained earnings $10,500

    Total Equity $78,500

    Accounts payable $5,000

    Total Equity and Liability $83,500

    *Working

    Net Profit = Service revenue - Salaries Expenses - Miscellaneous expenses

    Net Profit = $30,000 - $4,500 - $20,000 = $5,500

    Total retained Earning = $8,000 + $5,500 - $3,000 = $10,500
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