The first year of operations for a company was Year 1.The net income for the year Year 1 was $20,000 and dividends of $12,000 were paid.In Year 2, the company reported net income of $34,000 and paid dividends of $5,000.At the end of Year 1, the company had total assets of $150,000.At the end of Year 2, the company had total assets of $240,000.
-Use the information above to answer the following question.What is the amount of retained earnings at the end of Year 2?

Question

Quizplus · Accepted Answer

Retained earnings at the end of Year 2 is calculated as: Retained earnings at the end of Year 1 ($8,000) + Net income for Year 2 ($34,000) - Dividends paid in Year 2 ($5,000) = $37,000.

The First Year of Operations for a Company Was Year