Retained Earnings at the beginning and ending of the period were $300 and $800, respectively. If revenues were $1,100 and dividends paid to stockholders were $200, what was the amount of expenses for the period?
A) $500
B) $400
C) $900
D) $700

Question

Quizplus · Accepted Answer

The change in retained earnings is calculated as the ending balance minus the beginning balance, which equals $800 - $300 = $500. This change is due to net income minus dividends paid. Given that dividends paid were $200, we can deduce that net income was $500 + $200 = $700. Since net income is revenues minus expenses, and revenues were $1,100, the expenses must have been $1,100 - $700 = $400.

Retained Earnings at the Beginning and Ending of the Period