Panmar Inc. is preparing a statement of stockholders' equity for 2014. On January 1, 2014, Panmar started the year with a $200,000 credit balance in its retained earnings account. During 2014, the company earned net income of $140,000. Panmar declared dividends of $80,000 and paid $50,000 of those dividends. Also, the company received cash of $100,000 for additional shares of common stock issued and then paid $30,000 to repurchase shares of common stock. What is the balance in retained earnings on December 31, 2014?
A) $260,000.
B) $290,000.
C)$330,000.
D)$390,000.

Question

Quizplus · Accepted Answer

The retained earnings balance is calculated as the beginning balance plus net income minus dividends declared. Starting with $200,000, add $140,000 net income, subtract $80,000 dividends declared, resulting in $260,000.