Clowns-R-Us reported the following in the statement of comprehensive income for the year ended December 31: $$\begin{array} { l r }
\text { Income from continuing operations before tax } & \$ 800,000 \
\text { Income tax expense } & ( 300,000 ) \
\text { Net income } & 500,000 \
\text { Other comprehensive income } & 130,000 \
\text { Comprehensive income } & 600,000
\end{array}$$ During the year, the company paid $103,000 in dividends and purchased treasury stock with a par value of $20,000 at a cost of $95,000. If the balance of Retained Earnings at the beginning of the year was $470,000, what is the balance of Retained Earnings at the end of the year?
A) $1,007,000
B) $970,000
C) $867,000
D) $1,110,000

Question

Clowns-R-Us reported the following in the statement of comprehensive income for the year ended December 31: $$\begin{array} { l r } 
\text { Income from continuing operations before tax } & \$ 800,000 \
\text { Income tax expense } & ( 300,000 ) \
\text { Net income } & 500,000 \
\text { Other comprehensive income } & 130,000 \
\text { Comprehensive income } & 600,000
\end{array}$$ During the year, the company paid $103,000 in dividends and purchased treasury stock with a par value of $20,000 at a cost of $95,000. If the balance of Retained Earnings at the beginning of the year was $470,000, what is the balance of Retained Earnings at the end of the year?
A) $1,007,000
B) $970,000
C) $867,000
D) $1,110,000

Quizplus · Accepted Answer

The ending balance of Retained Earnings is calculated as the beginning balance plus net income minus dividends paid. Thus, $470,000 + $500,000 - $103,000 = $867,000. Treasury stock transactions do not affect Retained Earnings.

Clowns-R-Us Reported the Following in the Statement of Comprehensive Income