Question

The Andrews company currently has the following balances in their equity accounts: Common Stock $17,081 Retained earnings $98,561 Suppose next year the Andrews company generates $46,300 in Net Profit, and declares and pays $16,000 in Dividends. What will Andrews ending balance in Retained Earnings be next year?

Answer 1

Answer:

Andrews ending balance in Retained Earnings next year will be $128,861

Explanation:

Retained Earnings is a Reserve formed from the Company`s Profits retained back in the business and forms part of Shareholders Equity

Calculation of Ending Retained Earnings is: Opening Retained Earnings Balance + Net Profit for the Year - Dividends Declared during the year.

Andrews Company Ending  Retained Earnings for Next Year will be:

Opening Retained Earnings Balance     $98,561

Add Net Profit for the Year                     $46,300

Less Dividends                                        ($16,000)

Ending  Retained Earnings                      $128,861