On January 1,20B,Grover Inc.,started the year with a $22,000 credit balance in its retained earnings account.During 20B,the company earned profit of $40,000 and declared and paid dividends of $10,000.Also,the company received cash of $15,000 as an additional investment by its owners.Therefore,the balance in retained earnings on December 31,20B,would be which of the following?
A)$42,000.
B)$52,000.
C)$57,000.
D)$67,000.

Question

Quizplus · Accepted Answer

The retained earnings balance is calculated by adding the profit and subtracting the dividends from the beginning balance. Starting with $22,000, add the $40,000 profit, and subtract the $10,000 dividends, resulting in a $52,000 balance. The additional investment does not affect retained earnings.