During 2019, Beta Ltd incurred expenses of $30 000 and earned a net profit of $5 000. Retained profits at 1 January 2019 stood at $7 000 and dividends declared and paid totalled $3 000. What was the balance of Beta Ltd's retained profits at 31 December 2019?

Question

Quizplus · Accepted Answer

To calculate the balance of retained profits at the end of the year, we need to subtract the total dividends paid from the net profit and other retained profits.

Opening balance of retained profits: $7 000
Add net profit earned: $5 000
Total available retained profits: $12 000
Subtract dividends paid: $3 000
Balance of retained profits at 31 December 2019: $9 000 (Option C)

During 2019, Beta Ltd Incurred Expenses of $30 000 and Earned