Question

Midyear on July 31st, the Chester Corporation's balance sheet reported: Total Assets of $81.965 million Total Common Stock of $2.540 million Cash of $4.020 million Retained Earnings of $17.152 million. What were the Chester Corporation's total liabilities?

Answer 1

Total Liabilities = $62.273 million

Step-by-step explanation:

The accounting equation state that :

Total assets = capital + liabilities.

This is a fundamental relationship that underpins the preparation of financial statements

Capital for a company is represented by the shareholders funds which is the book value of issued common stock, share premium plus the retained earnings.

So we can apply the equation to the figures of Chester Corporation

81.965 =( $2.540 + 17.152 ) + liabilities

Liabilities = 81.965 - ( $2.540 + 17.1552 )

= $62.273 million

Total Liabilities = $62.273 million