Question

In: Accounting

Midyear on July 31st, the Andrews Corporation's balance sheet reported: Total Liabilities of $15.044 million Total...

Midyear on July 31st, the Andrews Corporation's balance sheet reported:

Total Liabilities of $15.044 million
Total Common Stock of $1.270 million
Cash of $2.010 million
Retained Earnings of $15.284 million.

What were the Andrews Corporation's total assets?

Expert Solution

We know that Balance Sheet is a sheet which contains balances of all the assets and liabilities of the reporting entity as on a particular date.

Thus, Balance Sheet contains two components - Assets and Liabilities.

The sum total of Assets and Liabilities should match. When the sum matches that is when it is a Balance Sheet.

The Liability side is made up of Stockholders Earnings and Outside liabilities.

Stockholders or Shareholders of the company also known as owners of the company.

The profit earned by the company and all the other Reserve and Surplus are reported under the head Retained Earnings which also belongs to Shareholders.

Thus Stockholders part is a combination of Share Capital (Capital Contribution) and Retained Earnings.

All other liabilities are outside liabilities.

Here the total of liability side will be the total of asset side as well.

Liability side total = Total Liabilities + Total Common Stock + Retained Earnings

= 15.044 + 1.270 + 15.284 = $ 31.598 million

Now this total will also be the total of asset side

Thus total assets of Andrews Corporation will be $ 31.598 million.

Cash is also a part of asset and it won't be separate than this.

Thus asset bifurcation will be

Cash - $ 2.010 million

Other assets - $ 29.588 million

ekkarill92 answered 1 year ago

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