Question

For the year ending December 31, 2020, Monty Corp. reports net income $130,000 and cash dividends $81,000. Determine the balance in retained earnings at December 31 assuming the balance in retained earnings on January 1, 2020, was $215,000. (List items that increase retained earnings first.)

Answer 1

The balance in retained earnings at December 31 is $264,000.00

Step-by-step explanation:

The balance in retained earnings at December 31 can be computed using the below ending retained earnings formula:

ending retained earnings=beginning retained earnings+net income-dividends

beginning retained earnings was the opening balance of retained earnings at January 1 2020 which was $215,000

net income for the year is $130,000

dividends of $81,000 were paid

ending retained earnings=$215,000+$130,000-$81,000=$ 264,000.00