Question

Pharoah Company started the year with $74400 in its Common Stock account and a credit balance in Retained Earnings of $54600. During the year, the company earned net income of $59500, and declared and paid $24800 of dividends. In addition, the company sold additional common stock amounting to $34700. As a result, the balance in retained earnings at the end of the year would be

Answer 1

Answer:

$89,300

Explanation:

The computation of the ending retained earning balance is shown below:

The ending balance of retained earning = Beginning balance of retained earnings + net income - dividend paid

= $54,600 + $59,500 - $24,800

= $89,300

We simply added the net income and deduct the dividend to the beginning balance of retained earning so that the ending balance of retained earning could come