On January 1,20A,Virginia Company had $22,000 of Retained Earnings.During 20A Virginia earned profit of $40,000 and declared and paid dividends of $20,000.In addition,the company received cash of $15,000 as an additional investment by its owners.What is the ending balance in Retained Earnings at December 31,20A?

Question

Quizplus · Accepted Answer

The ending balance in Retained Earnings is calculated as the beginning balance plus net income minus dividends. Starting with $22,000, add the profit of $40,000, and subtract the dividends of $20,000, resulting in $42,000. The additional investment does not affect Retained Earnings.

On January 1,20A,Virginia Company Had $22,000 of Retained Earnings