A company had a beginning balance in retained earnings of $50,000.During the year, the company earned net income of $85,000 and paid a $15,000 cash dividend.The company also declared a 2:1 stock split, which resulted in the issue of 10,000 new shares.At the time of the stock split, the shares were selling at a market price of $12.What is the balance in retained earnings at the end of the year?

Question

Quizplus · Accepted Answer

The ending balance in retained earnings is calculated as the beginning balance plus net income minus dividends. Thus, $50,000 + $85,000 - $15,000 = $120,000. The stock split does not affect retained earnings.

A Company Had a Beginning Balance in Retained Earnings of $50,000.During