Grason Corporation is preparing a budgeted balance sheet for 2018.The retained earnings balance at December 31,2017 was $533,500.The 2018 budgeted income statement shows expected net income of $112,000.The company expects to declare dividends during 2018 amounting to $40,000.The expected balance in retained earnings on the 2018 budgeted balance sheet is:
A)$533,500.
B)$605,500.
C)$645,500.
D)$493,500.
E)$685,500.

Question

Quizplus · Accepted Answer

The expected balance in retained earnings is calculated by taking the beginning balance of retained earnings, adding the net income for the year, and subtracting any dividends paid out. Therefore, $533,500 (beginning balance) + $112,000 (net income) - $40,000 (dividends) = $605,500.

Grason Corporation Is Preparing a Budgeted Balance Sheet for 2018