Question

Swifty Corporation started the year with $45600 in its Common Stock account and a credit balance in Retained Earnings of $33400. During the year, the company earned net income of $36500 and declared and paid $15200 of dividends. In addition, the company sold additional common stock amounting to $21300. As a result, the amount of its retained earnings at the end of the year would be

Answer 1

Retained earnings balance =$54,700

Step-by-step explanation:

Retained earnings is the proportion of profit made by a company which is not distributed as dividend but rather re-couped to be re-invested. A payment of dividend would reduce the balance of retained earnings while further profit retained increases it.

The balance of retained earnings at the end = opening balance + profit retained for the year - dividend paid for the year

= 33,400 + 36,500 - 15,200 = $54,700

Retained earnings balance =$54,700