Cape Co.started business this year.For this year,it had revenues of $240,000,expenses of $180,000 and cash flows from operating activities of $48,000,and paid dividends of $6,000.What is the amount of Retained Earnings at the end of Cape's first year of operations?

Question

Quizplus · Accepted Answer

First,calculate net income:
Net income = Revenues − Expenses
= $240,000 − $180,000 = $60,000
Then,use the statement of retained earnings equation to determine ending Retained Earnings:
Ending Retained Earnings = Beginning Retained Earnings + Net Income − Dividends
= $0 + $60,000 − $6,000 = $54,000

Cape CoStarted Business This Year