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29 September, 14:54

Carmen, Inc. started the year with $100,000 of retained earnings. The company reported $125,000 of net operating income and declared $35,000 of dividends. What is the amount of the company's ending retained earnings?

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  1. 29 September, 17:43
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    The amount of the company's ending retained earnings is $190,000

    Explanation:

    Ending balance in retained earnings is calculated by using following formula:

    Ending balance in retained earnings = Beginning balance in retained earnings + Net income - Cash dividends - Stock dividends

    Carmen, Inc. started the year with $100,000 of retained earnings. The company had $125,000 of net operating income and declared $35,000 of dividends.

    Ending balance in retained earnings = $100,000 + $125,000 - $35,000 = $190,000
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