Universal Corp.has beginning Retained Earnings of $80,000,cash flows from operating activities during the current year of $35,000,dividends paid during the year of $5,000,net income for the current year of $50,000,and Common Stock at the end of the year of $15,000.What is the amount of its Retained Earnings at the end of the year?

Question

Quizplus · Accepted Answer

Although Common Stock is part of stockholders' equity;it is not part of Retained Earnings.
Ending Retained Earnings = Beginning Retained Earnings + Net Income − Dividends
= $80,000 + $50,000 − $5,000 = $125,000