Denmark Inc.is preparing a statement of stockholders' equity for 2019.On January 1,2019,Denmark started the year with a $100,000 credit balance in its retained earnings account.During 2019,the company earned net income of $70,000 and declared dividends of $10,000.Also,the company received cash of $15,000 as an additional investment by its owners.What is the balance in retained earnings on December 31,2019?
A)$100,000.
B)$170,000.
C)$175,000.
D)$160,000.

Question

Quizplus · Accepted Answer

The balance in retained earnings on December 31, 2019, is calculated as the beginning balance plus net income minus dividends: $100,000 + $70,000 - $10,000 = $160,000. The additional investment by owners affects equity but not retained earnings.