At the beginning of the year,Sigma Company's balance sheet reported Total Assets of $195,000; Total Liabilities of $15,000; and Total Paid-in capital of $60,000.During the year,the company reported total revenues of $226,000 and expenses of $175,000.Also,dividends during the year totaled $48,000.Assuming no other changes to Retained earnings,the balance in the Retained earnings account at the end of the year would be:
A)$174,000.
B)$78,000.
C)$171,000.
D)$120,000.
E)$123,000.

Question

Quizplus · Accepted Answer

The beginning Retained Earnings can be calculated as Total Assets - Total Liabilities - Total Paid-in Capital = $195,000 - $15,000 - $60,000 = $120,000. Net income for the year is Revenues - Expenses = $226,000 - $175,000 = $51,000. Ending Retained Earnings = Beginning Retained Earnings + Net Income - Dividends = $120,000 + $51,000 - $48,000 = $123,000.

At the Beginning of the Year,Sigma Company's Balance Sheet Reported