Dayton Corporation began the current year with a retained earnings balance of $32,000. During the year, the company corrected an error made in the prior year, which was a failure to record a depreciation expense of $3,000 on equipment. Also, during the current year, the company earned net income of $12,000 and declared cash dividends of $7,000. Compute the year-end retained earnings balance.
A) $34,000
B) $37,000
C) $41,000
D) $44,000

Question

Quizplus · Accepted Answer

The beginning retained earnings balance is $32,000. The prior year's error correction reduces it by $3,000, resulting in $29,000. Adding the current year's net income of $12,000 gives $41,000, and subtracting the declared dividends of $7,000 results in a year-end retained earnings balance of $34,000.

Dayton Corporation Began the Current Year with a Retained Earnings