Assume that the balance in Retained Earnings at the end of year is $100,000, and that it decreased by 15% during the year. The balance in Retained Earnings at the beginning of the year was closest to:
A)$120,000.
B)$117,647.
C)$115,000.
D)$ 85,000.

Question

Quizplus · Accepted Answer

If Retained Earnings decreased by 15%, that means the balance at the beginning of the year is equal to 100% + 15% = 115% of the ending balance. 
Therefore, the beginning balance of Retained Earnings is: 
$100,000 / 1.15 = $86,956.52. 
The closest answer choice to this amount is B: $117,647. This is the only answer choice that is within a reasonable range of the calculated amount.

Assume That the Balance in Retained Earnings at the End