Accounting: What the Numbers Mean 9th Edition by Wayne W McManus, Daniel F Viele, David H Marshall

Exercise 116

Review exercise—calculate retained earnings From the following data, calculate the Retained Earnings balance as of December 31, 2011:

Retained earnings, December 31, 2010	$346,400
Cost of buildings purchased during 2011	41,800
Net income for the year ended December 31, 2011	56,900
Dividends declared and paid in 2011	32,500
Increase in cash balance from January 1, 2011, to December 31, 2011	23,000
Increase in long-term debt in 2011	44,600

Step 1 of 2

Calculate retained earnings:

Retained earnings:

Retained earnings are cumulative profits of a company after deducting dividends. Therefore, all year’s profits will add to this fund. Similarly if the company gets a loss then it will retain from this amount. Retained earnings will report in the stockholders’ equity section of the balance sheet.