Question

A company had a beginning balance in retained earnings of $400,000. It had net income of $50,000 and declared and paid cash dividends of $55,000 in the current period. The ending balance in retained earnings equals:

Answer 1

Answer:

$395,000

Explanation:

A company has a beginning balance of $400,000

The company has a net income of $50,000

The company also declared and paid a cash dividend of $55,000

Therefore, the ending balance in the retained earnings can be calculated as follows

Beginning balance+ net income -Dividend paid

= $400,000+$50,000-$55,000

= $395,000

Hence the ending balance in the retained earnings is $395,000