For the current financial year a hotel had $350,000 in its retained earnings account at the beginning of the year. During the year it earned $80,000 in profit and paid $32,000 in dividends to its owners. The balance sheet at the end of the current financial year should reflect a retained earnings balance of:

Question

Quizplus · Accepted Answer

The retained earnings balance for the current financial year can be calculated as follows:

Retained earnings at beginning of year = $350,000
Profit earned during the year = $80,000
Dividends paid during the year = -$32,000 (note the negative sign)
Retained earnings balance at end of year = $398,000 (350,000 + 80,000 - 32,000 = 398,000)

Therefore, the correct answer is option C.

For the Current Financial Year a Hotel Had $350,000 in Its