Nichole Company's balance sheet as of December 31, 2019 showed total assets of $170,000, and total liabilities of $70,000, and common stock of $64,000. During 2020, the company reported revenues of $64,000, expenses of $50,000, and paid dividends of $16,000.
What was the balance in the Retained Earnings account on January 1, 2021?

Question

Quizplus · Accepted Answer

2019 Ending retained earnings = Assets - Liabilities - Common stock
(X = $170,000 - $70,000 - $64,000 = $36,000)
2020 Beginning retained earnings = 2019 Ending retained earnings = $36,000
2020 Beginning retained earnings + Net income - Dividends = 2020 Ending retained earnings
($36,000 + ($64,000 - $50,000) - $16,000 = $34,000)
2021 Beginning retained earnings = 2020 Ending retained earnings = $34,000

Nichole Company's Balance Sheet as of December 31, 2019 Showed