Beginning Retained Earnings are $87,000; sales are $31,800; expenses are $37,000; and dividends paid are $3,700. How much is the amount in ending Retained Earnings?

Question

Quizplus · Accepted Answer

The ending Retained Earnings is calculated as Beginning Retained Earnings + Net Income - Dividends. Net Income is Sales - Expenses. Therefore, Net Income = $31,800 - $37,000 = -$5,200 (a loss). Ending Retained Earnings = $87,000 - $5,200 - $3,700 = $78,100.

Beginning Retained Earnings Are $87,000; Sales Are $31,800; Expenses Are