At the end of Year 2, retained earnings for the Baker Company was $3,500. Revenue earned by the company in Year 2 was $1,500, expenses paid during the period were $800, and dividends paid during the period were $500. Based on this information alone, retained earnings at the beginning of Year 2 was:
A) $3,300.
B) $3,700.
C) $2,800.
D) $3,800.

Question

Quizplus · Accepted Answer

Beginning Retained Earnings + Revenue − Expenses − Dividends = Ending Retained Earnings
Beginning Retained Earnings + $1,500 − $800 − $500 = $3,500
Beginning Retained Earnings = $3,300

At the End of Year 2, Retained Earnings for the Baker