In 2011, Oceanview Co.reported net income of $75,000 and declared a dividend of $40,000.The dividend is to be paid on February 1, 2012 to shareholders of record on January 15, 2012.The balance in the retained earnings account on January 1, 2011 was $140,000.At Ocean's year end on December 31, 2011 the company reported the following ending balance on the statement of shareholders' equity:
A)$ 35,000
B)$ 115,000
C)$ 175,000
D)$ 215,000

Question

Quizplus · Accepted Answer

The ending balance in retained earnings is calculated by starting with the beginning balance, adding net income, and subtracting dividends. So, $140,000 + $75,000 - $40,000 = $175,000.