At January 1, 2022, Blue Corporation had a credit balance of $3,050,000 in its retained earnings account.During the year, Blue paid $275,000 in dividends, reported net income of $420,000 and other comprehensive income of $750,000.The December 31 balance of retained earnings is
A)$3,195,000.
B)$3,945,000.
C)$2,445,000.
D)$2,775,000.

Question

Quizplus · Accepted Answer

The December 31 balance of retained earnings is calculated by starting with the January 1 balance, adding net income, and subtracting dividends. Other comprehensive income does not affect retained earnings. Therefore, the calculation is $3,050,000 + $420,000 - $275,000 = $3,195,000.

At January 1, 2022, Blue Corporation Had a Credit Balance