Question

oe Doakes was reading the balance sheet of Gogoldze Inc. when he spilled coffee on it. After the coffee spill, the balance sheet looked like this:


($ millions)

12/31/2015

Cash

100

Accounts Receivable

245

Inventory

450

Other Current Assets

60

Current Assets

855

Net Property, Plant, & Equipment

1,160

Total Assets

2,015



Accounts Payable

160

Other Current Liabilities

250

Current Liabilities

410

Long-term Liabilities

900

Common Stock

50

Additional Paid-in Capital

300

Retained Earnings

coffee

Total Liabilities and SE

coffee

What was Gogoldze Inc.'s Retained Earnings at 12/31/2015?


$550



$355



($55)



$3,675



$960


1 point
8.
Question 8
Francisco

Answer 1

To determine Gogoldze Inc.'s Retained Earnings at 12/31/2015, we can use the accounting equation:

\[ \text{Total Assets} = \text{Total Liabilities} + \text{Shareholders' Equity} \]

We know from the balance sheet that:

- Total Assets = $2,015 million
- Current Liabilities = $410 million
- Long-term Liabilities = $900 million

First, we can find Total Liabilities:

\[
\text{Total Liabilities} = \text{Current Liabilities} + \text{Long-term Liabilities} = 410 + 900 = 1,310 \text{ million}
\]

Now we can use the accounting equation to determine Total Shareholders' Equity:

\[
\text{Total Assets} = \text{Total Liabilities} + \text{Shareholders' Equity}
\]
\[
2,015 = 1,310 + \text{Shareholders' Equity}
\]

Solving for Shareholders' Equity:

\[
\text{Shareholders' Equity} = 2,015 - 1,310 = 705 \text{ million}
\]

Now, we can express Shareholders' Equity as follows:

\[
\text{Shareholders' Equity} = \text{Common Stock} + \text{Additional Paid-in Capital} + \text{Retained Earnings}
\]

We know:

- Common Stock = $50 million
- Additional Paid-in Capital = $300 million

Thus,

\[
705 = 50 + 300 + \text{Retained Earnings}
\]
\[
705 = 350 + \text{Retained Earnings}
\]

Now, solving for Retained Earnings:

\[
\text{Retained Earnings} = 705 - 350 = 355 \text{ million}
\]

Therefore, Gogoldze Inc.'s Retained Earnings at 12/31/2015 is:

**$355 million.**