Question

On January 1, 2015, Mansfield Company has a retained earnings balance of $256,000. During 2015, its net income is $44,000 and it announces and pays $12,000 in dividends. There is no other dividend-related activity during the year. Its December 31, 2015 retained earnings balance is:a. $212,000b. $288,000c. $300,000d. $224,000

Answer 1

b. $288,000

Step-by-step explanation:

Data provided

Beginning retained earning = $256,000

Net income = $44,000

Dividend = $12,000

The computation of retained earnings balance is shown below:-

Retained earnings balance = Beginning retained earning + Net income - Dividend

= $256,000 + $44,000 - $12,000

= $288,000

Therefore for computing the retained earning balance we simply applied the above formula.