B & B Company had beginning retained earnings of $45,000.During the year the company had net income of $139,000,and declared and paid dividends of $9,500.B & B Company sold 2,500 shares of stock for $30 per share.What is the net effect of these transactions on the following accounts?

Question

Quizplus · Accepted Answer

The net income increases retained earnings by $139,000, and dividends decrease it by $9,500, resulting in a net increase of $129,500. Selling stock increases common stock by $75,000 (2,500 shares x $30).

B & B Company Had Beginning Retained Earnings of $45,000