Paquin Company has the following information available for the most current year:
$\begin{array} { l }
\text {Paid-in capital, January 1, 2014 }&\$475,000\
\text {Retained earnings, January 1, 2014 }&\$50,000 \
\text {Total revenues in 2014 }&\$890,000 \
\text { Total expenses in 2014}&\$550,000 \
\text { Dividend declared in 2014}&\$70,000 \
\end{array}$

What was the balance in Retained Earnings at December 31,2014?
A) $270,000
B) $320,000
C) $390,000
D) $405,000

Question

Paquin Company has the following information available for the most current year:
$\begin{array} { l  }
 \text {Paid-in capital, January 1, 2014 }&\$475,000\
 \text {Retained earnings, January 1, 2014 }&\$50,000 \
 \text {Total revenues in 2014 }&\$890,000 \
 \text { Total expenses in 2014}&\$550,000 \
 \text { Dividend declared in 2014}&\$70,000 \
\end{array}$

What was the balance in Retained Earnings at December 31,2014?
A) $270,000
B) $320,000
C) $390,000
D) $405,000

Quizplus · Accepted Answer

The balance in Retained Earnings at December 31, 2014, is calculated as follows: Starting Retained Earnings + Net Income - Dividends. Net Income is Revenues - Expenses. Therefore, Net Income = $890,000 - $550,000 = $340,000. Starting Retained Earnings = $50,000. Thus, the ending Retained Earnings = $50,000 + $340,000 - $70,000 = $320,000.

Paquin Company Has the Following Information Available for the Most