On January 1, Polk Corporation's Retained Earnings account had a balance of $625,000. During the year, cash dividends of $27,000 and small stock dividends with a market value of $53,000 were declared and distributed. Polk Corporation reported a net loss of $7,000 for the year. What is the balance in Retained Earnings on December 31?

Question

Quizplus · Accepted Answer

The balance in Retained Earnings is calculated by taking the beginning balance, subtracting cash dividends, subtracting the market value of stock dividends, and subtracting the net loss. Starting with $625,000, subtract $27,000 (cash dividends), $53,000 (stock dividends), and $7,000 (net loss) to get $538,000.

On January 1, Polk Corporation's Retained Earnings Account Had a Balance