Mobile Power Corp.reported the following information for the year ended December 31,2014. What was the retained earnings balance for Mobile Power at December 31,2013?
A)$ 165,000
B)$ 168,000
C)$ 182,000
D)$ 192,000

Question

Mobile Power Corp.reported the following information for the year ended December 31,2014.  What was the retained earnings balance for Mobile Power at December 31,2013?
A)$ 165,000 
B)$ 168,000 
C)$ 182,000 
D)$ 192,000

Quizplus · Accepted Answer

The retained earnings balance at the end of the current year (2014) is $189,000. To find the retained earnings balance at the end of the previous year (2013), we need to subtract the current year's net income ($120,000) and dividends paid ($3,000) from the current year's ending balance of retained earnings. 
$189,000 - $120,000 - $3,000 = $66,000 
Therefore, the retained earnings balance for Mobile Power at December 31, 2013 was $66,000. 
Option B, $168,000, is the closest to the calculated balance.