Question

White Company's assets total $780,000 and its owners' equity consists of capital stock of $500,000 and retained earnings of $150,000. Determine the Company's total amount of outstanding liabilities.

Answer 1

Answer:

$130,000

Explanation:

With regards to the above information, recall that;

Assets = Liabilities + Retained earnings.

Equity consist of Capital stock + Retained earnings

Given that;

Assets = $780,000

Liabilities ?

Capital stock = $500,000

Retained earnings = $150,000

Therefore,

$780,000 = Liabilities + $500,000 + $150,000

Liabilities = $780,000 - $500,000 - $150,000

Liabilities = $130,000

White company's total amount of outstanding liabilities is $130,000

Answer 2

Based on the total assets and the total equity, the outstanding liabilities can be calculated to be $130,000

The accounting equation is:

Assets = Equity + Liabilities

Equity includes both capital stock and retained earnings.

Liabilities here are therefore:

780,000 = (500,000 + 150,000) + Liabilities

Liabilities = 780,000 - 650,000

= $130,000

In conclusion, liabilities are $130,000

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