Tara Westmont, the stockholder of Tiptoe Shoes, Inc., had annual revenues of $185,000, expenses of $103,700, and the company paid $18,000 cash in dividends to the owner (sole stockholder). The retained earnings account before closing had a balance of $297,000. The ending retained earnings balance after closing is:

Question

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The ending retained earnings balance is calculated by adding net income to the beginning retained earnings and then subtracting dividends. Net income is $185,000 - $103,700 = $81,300. The ending retained earnings is $297,000 + $81,300 - $18,000 = $360,300.

Tara Westmont, the Stockholder of Tiptoe Shoes, Inc