What are Ending Retained Earnings in the table below?Total Assets300Total Liabilities120Total Stockholder's EquityBeginning Retained Earnings30Ending Retained Earnings?Dividends10Revenues190Expenses140Net IncomeCash501 point20Not enough information7050-20
Question
What are Ending Retained Earnings in the table below?Total Assets300Total Liabilities120Total Stockholder's EquityBeginning Retained Earnings30Ending Retained Earnings?Dividends10Revenues190Expenses140Net IncomeCash501 point20Not enough information7050-20
Solution
The Ending Retained Earnings can be calculated using the following formula:
Ending Retained Earnings = Beginning Retained Earnings + Net Income - Dividends
First, we need to calculate the Net Income. Net Income is calculated as:
Net Income = Revenues - Expenses
From the table, Revenues = 190 and Expenses = 140. So,
Net Income = 190 - 140 = 50
Now, we can calculate the Ending Retained Earnings. From the table, Beginning Retained Earnings = 30 and Dividends = 10. So,
Ending Retained Earnings = 30 (Beginning Retained Earnings) + 50 (Net Income) - 10 (Dividends) = 70
So, the Ending Retained Earnings is 70.
Similar Questions
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Retained earnings represent:a. Cash available for distribution to shareholdersb. Accumulated net income of the companyc. Shareholders' investments in the companyd. Amount owed to creditors
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Retained earnings are a component of:
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