When preparing the financial statements of Somersby Ltd, the accountant found the following information: opening balance of Retained earnings $15,000; Interim dividends paid $2,500; Profit earned $20,000; Dividends declared $5,000. The closing balance of Retained earnings for Somersby Ltd is:
A) $7,500.
B) $30 000.
C) $27,500.
D) $15 000.

Question

Quizplus · Accepted Answer

The closing balance of retained earnings is (15,000 - 2,500 + 20,000 - 5,000) = $27,500.

When Preparing the Financial Statements of Somersby Ltd, the Accountant