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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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For the current year, Vidalia Company reported revenues of $250,000 and expenses of $225,000. At the beginning of the year, its retained earnings had a balance of $95,000. During the year, Vidalia paid $11,000 dividends to shareholders. Its contributed capital was $56,000 at the beginning of the year, and it did not issue any new stock during the year. Vidalia’s assets total $237,500 on December 31 of the current year. What are Vidalia’s total liabilities on December 31 of the current year?

To determine

Calculate total liabilities as on December 31 of the current year.

Explanation

Balance sheet: Balance Sheet is one of the financial statements that summarize the assets, the liabilities, and the Shareholder’s equity of a company at a given date. It is also known as the statement of financial status of the business.

Calculate total liabilities as on December 31 of the current year.

Total liabilites = Total assetsStockholders' equity=$237,500 $165,000=$72,500

Therefore, total liabilities as on December 31, of the current year are $72,500.

Working notes:

(1) Calculate net income.

Net income = Revenues Expenses=$250,000$225,000=$25,000

(2) Calculate ending retained earnings

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