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Reconcile the asset and liability amounts
| Group | Components | Total |
|---|---|---|
| Assets | 18 cash + 32 receivables + 25 inventory + 140 net PPE | 215 |
| Liabilities | 21 payables + 15 short-term debt + 90 long-term debt | 126 |
| Equity | 215 − 126 | 89 |
State the component assumption before solving the residual
Contributed capital is 60. The exercise explicitly assumes retained earnings is the only other equity component. Under that assumption, retained earnings are 89 − 60 = 29. Other comprehensive income, noncontrolling interests or other equity items would change what could be inferred.
Check the completed statement
Liabilities 126 plus contributed capital 60 plus retained earnings 29 equal assets 215. This arithmetic validates the stated reconciliation, not the completeness or measurement quality of an actual company’s report.
Keep equity separate from cash
The cash amount remains 18 in this model. Equity 89 and retained earnings 29 are not separate cash accounts. A statement can therefore report positive accumulated earnings with a much smaller cash balance.