On January 1, Kimberling Corporation's Retained Earnings account had a balance of $400,000. During the year, the board of directors declared cash dividends of $50,000 and stock dividends with a market value of $40,000. Net income for the year amounted to $120,000. What is the balance in Retained Earnings appearing on the statement of stockholders' equity on December 31?

Question

Quizplus · Accepted Answer

The balance in Retained Earnings is calculated as the beginning balance plus net income minus cash dividends. Stock dividends do not affect the Retained Earnings balance. Therefore, $400,000 + $120,000 - $50,000 = $470,000.

On January 1, Kimberling Corporation's Retained Earnings Account Had a Balance