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The balances in Belfast Inc.'s shareholders' equity accounts at December 31, 2020 are: At this, time, a financial reorganization was approved. Equipment was written down $ 101,800, and inventory increased $ 5,800.
-What will the balance in retained earnings be after the reorganization?
A) $ 936,000
B) $ (460,000)
C) $ (268,000)
D) $ 0

Question

Use the following information for questions.
The balances in Belfast Inc.'s shareholders' equity accounts at December 31, 2020 are:  At this, time, a financial reorganization was approved. Equipment was written down $ 101,800, and inventory increased $ 5,800.
-What will the balance in retained earnings be after the reorganization?
A) $ 936,000 
B) $ (460,000) 
C) $ (268,000) 
D) $ 0

Quizplus · Accepted Answer

In a reorganization, retained earnings are often reset to zero to reflect the new financial structure of the company.

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