The first year of operations for a company was Year 1.The net income for Year 1 was $20,000 and dividends of $12,000 were paid.In Year 2,the company reported net income of $34,000 and paid dividends of $5,000.At the end of Year 1,the company had total assets of $150,000.At the end of Year 2,the company had total assets of $240,000. What is the amount of retained earnings at the end of Year 2?

Question

Quizplus · Accepted Answer

Ending retained earnings = Beginning retained earnings + Net income − Dividends
Year 1:
= $0 + $20,000 − $12,000 = $8,000
Year 2:
= $8,000 + $34,000 − $5,000 = $37,000

The First Year of Operations for a Company Was Year