Smith Company had retained earnings of $60,000 at the end of the current year.For the current year,income was $30,000 and dividends $10,000.What was the balance in retained earnings at the end of the prior year?
A)$30,000
B)$40,000.
C)$60,000
D)$30,000.
E)$70,000

Question

Quizplus · Accepted Answer

Retained earnings at the end of the current year = Retained earnings at the end of the prior year + Income - Dividends 
$60,000 = Retained earnings at the end of the prior year + $30,000 - $10,000 
$60,000 = Retained earnings at the end of the prior year + $20,000 
Retained earnings at the end of the prior year = $40,000

Smith Company Had Retained Earnings of $60,000 at the End