At the beginning of the year, a company's balance sheet reported the following balances: Total Assets = $225,000; Total Liabilities = $125,000; and Retained Earnings = $100,000. During the year, the company reported revenues of $46,000 and expenses of $30,000. In addition, dividends for the year totaled $20,000. Assuming no other changes to retained earnings, the balance in the retained earnings account at the end of the year would be:
A)$116,000.
B)$136,000.
C)$24,000.
D)$96,000.
E)$104,000.

Question

Quizplus · Accepted Answer

The ending retained earnings is calculated as beginning retained earnings plus net income minus dividends. Net income is revenues minus expenses, which is $46,000 - $30,000 = $16,000. Therefore, ending retained earnings = $100,000 + $16,000 - $20,000 = $96,000.

At the Beginning of the Year, a Company's Balance Sheet