Gilkey Corporation began the year with retained earnings of $465,000. During the year, the company issued $630,000 of common stock, recorded expenses of $1,800,000, and paid dividends of $120,000. If Gilkey's ending retained earnings was $495,000, what was the company's revenue for the year?
A) $1,830,000
B) $1,950,000
C) $2,460,000
D) $2,580,000

Question

Quizplus · Accepted Answer

To find the company's revenue, use the retained earnings formula: Beginning Retained Earnings + Net Income - Dividends = Ending Retained Earnings. Plug in the values: $465,000 + Net Income - $120,000 = $495,000. Solving for Net Income gives $150,000. Since Net Income = Revenue - Expenses, $150,000 = Revenue - $1,800,000. Therefore, Revenue = $1,950,000.

Gilkey Corporation Began the Year with Retained Earnings of $465,000