Marcos Inc.had net income for 2016 of $40,000.It declared and paid a $3,500 cash dividend in 2016.If the company's retained earnings for the end of the year were $38,200, what was the company's retained earnings balance at the beginning of 2016?
A) $81,700
B) $74,700
C) $5,300
D) $1,700

Question

Quizplus · Accepted Answer

The beginning retained earnings balance can be calculated by taking the ending retained earnings ($38,200), subtracting the net income for the year ($40,000), and then adding back the dividends paid ($3,500). This gives $1,700 as the beginning retained earnings balance.