The Embroidery Shoppe had beginning retained earnings of $18,670.During the year,the company reported sales of $83,490,costs of $68,407,depreciation of $8,200,dividends of $950,and interest paid of $478.The tax rate is 34 percent.What is the retained earnings balance at the end of the year?

Question

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The correct answer is A. The retained earnings balance at the end of the year is $21,947.30. This is calculated by taking the beginning retained earnings of $18,670, adding the net income for the year of $6,613, and subtracting the dividends paid of $950. The net income is calculated by taking the sales of $83,490, subtracting the costs of $68,407, the depreciation of $8,200, and the interest paid of $478, and then multiplying the result by the tax rate of 34%.

The Embroidery Shoppe Had Beginning Retained Earnings of $18,670