Question

# Judith Industries Financial Statements indicate the following: Total Assets = \$400,000 Total Liabilities = \$160,000 Total...

Judith Industries Financial Statements indicate the following:

Total Assets = \$400,000

Total Liabilities = \$160,000

Total Equity = \$?

Common Stock = \$200,000

Dividends = \$20,000

Revenue = \$?

Expenses = \$80,000

Required: Determine (A) Total Equity and (B) Revenue

(A) Computation of Total Equity:

As we know that:

Total Assets = Total Liabilities + Total Equity

\$400,000 = \$160,000 + Total Equity

Therefore, Total equity = \$400,000 - \$160,000 = \$240,000

(B) Computation of Revenue:

As we know that:

Total Equity = Common stock + Retained Earnings

\$240,000 = \$200,000 + Retained Earnings

Therefore, retained earnings = \$40,000

Retained Earnings = Profits - Dividends

\$40,000 = Profit - \$20,000

Therefore, Profit = \$60,000

As we know that:

Profits = Revenue - Expenses

\$60,000 = Revenue - \$80,000

Therefore, Revenue = \$140,000

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