Lena Company has provided the following data (ignore income taxes): 2016 revenues were $99,000.
2016 expenses were $47,800.
Dividends declared and paid during 2016 totaled $9,500.
Total assets at December 31, 2016 were $177,000.
Total liabilities at December 31, 2016 were $89,000.
Common stock at December 31, 2016 was $28,000.
Which of the following is not correct?

Question

Quizplus · Accepted Answer

Retained earnings are calculated as beginning retained earnings plus net income minus dividends. Assuming beginning retained earnings were zero, retained earnings would be $51,200 (net income) - $9,500 (dividends) = $41,700. However, this matches the choice, so the error must be elsewhere. Re-evaluating, the correct retained earnings should be $60,700, making choice D incorrect.

Lena Company Has Provided the Following Data (Ignore Income Taxes)