Question

During the year, patriot partners had $245,000 in revenues, $120,000 in expenses, and $40,000 in declared dividends. What was the total change in retained earnings during the year?

Answer 1

$85,000

Step-by-step explanation:

Retained earning (R) is the net income of a business after expenses and dividing the corresponding money to the shareholders, normally the retained earning is calculated annually, we can use the retained earning formula to find R as follow: R = Net Income - Expenses - Declared dividends = $245,000 - $120,000 - $40,000 = $85,000

Answer 2

Calculation of total change in retained earnings during the year:

Total change in retained earnings during the year can be calculated using the following formula:

Total change in retained earnings during the year = Revenues Earned during the year – Expenses incurred during the year – Dividends declared during the year

= 245000-120000-40000

= 85,000

Hence, total change in retained earnings during the year is $85,000