At January 1, 2012, Jay Corporation had a credit balance of $5,450,000 in its retained earnings account. During the year, Jay paid $250,000 in dividends, reported profit of $560,000 and other comprehensive income of $750,000. The December 31 balance of retained earnings is:
A)$5,760,000.
B)$5,950,000.
C)$6,200,000.
D)$6,450,000.

Question

Quizplus · Accepted Answer

The December 31 balance of retained earnings is calculated as the beginning balance plus profit minus dividends: $5,450,000 + $560,000 - $250,000 = $5,760,000. Other comprehensive income does not affect retained earnings.

At January 1, 2012, Jay Corporation Had a Credit Balance