Question

The Don't Tread on Me Tire Company had Retained Earnings at December 31, 2015 of $200,000. During 2016, the company had revenues of $400,000 and expenses of $350,000, and the company declared and paid dividends of $11,000. Retained earnings on the balance sheet as of December 31, 2016 will be:

Answer 1

$239,000

Step-by-step explanation:

The computation of the ending retained earning balance is shown below:

As we know that

Ending retained earnings = beginning retained earnings + net income - dividend paid

where,

Net income is

= Revenues - expenses

= $400,000 - $350,000

= $50,000

And, the other items values would remain the same

So, the ending balance is

= $200,000 + $50,000 - $11,000

= $239,000