Columbia Company began the current year with 450,000 in assets and 250,000 in total stockholders equity. During the year Columbia earned 85,000 and distributed 10,000 as dividends. Assets at year end were 500,000. Liabilities were what?
I know the answer is 175,000 but I can't figure out what numbers to plug into "Assets = Liabilities + Stockholders' Equity" in order to learn how to do it for my upcoming test.
I have plugged every number I can think of into that equation and cannot seem to come up with 175,000. I have tried 500,000-450,000=50,000. Then 50,000+85,000=135,000. But no matter what I try I can't come up with 175,000.
Assets = Stockholders Equity + Total Liabilities
(500 000) = (250 000 + 85 000 - 10 000) + Total Liabilities
Total Liabilities = 175 000
Is it supposed to be this way? Because 10 000 is paid off as dividends, so you only earned 75 000 instead of 85 000.