The following accounts are taken from the December 31, Year 4 financial statements of a company.

-Use the information above to answer the following question.What is the amount of retained earnings on the Balance Sheet at the end of Year 4?

Question

The following accounts are taken from the December 31, Year 4 financial statements of a company.
 
-Use the information above to answer the following question.What is the amount of retained earnings on the Balance Sheet at the end of Year 4?

Quizplus · Accepted Answer

Retained earnings can be calculated as follows: Beginning Retained Earnings + Net Income - Dividends. From the information given, the beginning retained earnings are $5,000, net income is $2,750, and dividends are $1,025. Therefore, the retained earnings at the end of Year 4 would be $4,725 (i.e. $5,000 + $2,750 - $1,025 = $6,725 - $1,000 = $5,725).

The Following Accounts Are Taken from the December 31, Year