On January 1, 2013, Assembly System Corporation's Retained Earnings account had a balance of $675,000. During 2013, cash dividends of $25,000 and stock dividends with a market value of $55,000 were declared and distributed. Assembly System Corporation had a net loss of $5,000 in 2013. What is the balance in Retained Earnings that would appear on Assembly System Corporation's statement of shareholders' equity on December 31, 2013?

Question

Quizplus · Accepted Answer

The retained earnings decrease by the net loss ($5,000) and the cash dividends ($25,000). Stock dividends do not affect the retained earnings balance. Therefore, the ending balance is $675,000 - $5,000 - $25,000 = $645,000.

On January 1, 2013, Assembly System Corporation's Retained Earnings Account