On January 1, 20A, Virginia Company had $22,000 of Retained Earnings. During 20A Virginia earned profit of $40,000 and declared and paid dividends of $20,000. In addition, the company received cash of $15,000 as an additional investment by its owners. What is the ending balance in Retained Earnings at December 31, 20A?
A) $42,000.
B) $57,000.
C) $67,000.
D) $32,000.

Question

Quizplus · Accepted Answer

The ending balance in Retained Earnings is calculated as the beginning balance plus net income minus dividends. Starting with $22,000, adding the profit of $40,000, and subtracting the dividends of $20,000 results in $42,000. The additional investment does not affect Retained Earnings.

On January 1, 20A, Virginia Company Had $22,000 of Retained