During 2021, its first year of operations, Neko's Bakery had revenues of $60,000 and expenses of $35,000.The business paid dividends of $20,000.What is the amount of retained earnings at December 31, 2021?

Question

Quizplus · Accepted Answer

Retained earnings are calculated as the net income minus dividends paid. Neko's Bakery had a net income of $25,000 ($60,000 in revenues minus $35,000 in expenses) and paid dividends of $20,000, leaving $5,000 in retained earnings.

During 2021, Its First Year of Operations, Neko's Bakery Had