Woodlawn Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: Retained earnings balance at the beginning of the year $233,000
Cash dividends declared for the year $50,000
Proceeds from the sale of equipment $85,000
Gain on the sale of equipment $4,500
Cash dividends payable at the beginning of the year $22,000
Cash dividends payable at the end of the year $30,000
Net income for the year $110,000
The ending balance in retained earnings is:

Question

Quizplus · Accepted Answer

The ending balance in retained earnings is calculated by starting with the beginning balance, adding net income, and subtracting dividends declared. Beginning retained earnings ($233,000) + Net income ($110,000) - Dividends declared ($50,000) = Ending retained earnings ($293,000). Cash dividends payable and proceeds from the sale of equipment, including the gain on sale, do not affect the retained earnings calculation directly.

Woodlawn Company Is Preparing the Company's Statement of Cash Flows