At the end of Year 2, retained earnings for the Baker Company was $2,350. Revenue earned by the company in Year 2 was $2,600, expenses paid during the period were $1,400, and dividends paid during the period were $800. Based on this information alone, what was the amount of retained earnings at the beginning of Year 2?
A)$1,150
B)$2,750
C)$1,950
D)$5,200

Question

Quizplus · Accepted Answer

Retained earnings at the end of Year 2 = Retained earnings at the beginning of Year 2 + Revenue - Expenses - Dividends

$2,350 = Retained earnings at the beginning of Year 2 + $2,600 - $1,400 - $800

$2,350 = Retained earnings at the beginning of Year 2 + $400

Retained earnings at the beginning of Year 2 = $1,950

At the End of Year 2, Retained Earnings for the Baker