Panmar Inc.is preparing a statement of stockholders' equity for 2019.On January 1,2019,Panmar started the year with a $200,000 credit balance in its retained earnings account.During 2019,the company earned net income of $140,000.Panmar declared dividends of $80,000 and paid $50,000 of those dividends.Also,the company received cash of $100,000 for additional shares of common stock issued and then paid $30,000 to repurchase shares of common stock.What is the balance in retained earnings on December 31,2019?
A)$260,000.
B)$290,000.
C)$330,000.
D)$390,000.

Question

Quizplus · Accepted Answer

The balance in retained earnings on December 31, 2019, is calculated as follows: Starting retained earnings ($200,000) + Net income ($140,000) - Dividends declared ($80,000) = $260,000. The cash received for additional shares and the repurchase of shares affect other equity accounts, not retained earnings.