Mia Hero,Inc.had a retained earnings balance of $7,000 on December 31,2011.For the year 2012,sales revenues are $15,000 and expenses are $13,000.If no dividend is declared or paid in 2012,retained earnings at December 31,2012 equals ________.
A)$9,000
B)$10,000
C)$35,000
D)some other amount

Question

Quizplus · Accepted Answer

The retained earnings at the end of 2012 is calculated by adding the net income for 2012 to the retained earnings at the end of 2011. Net income for 2012 is $15,000 (revenues) - $13,000 (expenses) = $2,000. Therefore, retained earnings at December 31, 2012, is $7,000 + $2,000 = $9,000.