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22 March, 04:39

At the beginning of the year, a company's balance sheet reported the following balances: Total Assets = $225,000; Total Liabilities = $100,000; Common Stock, $25,000, and Retained Earnings = $100,000. During the year, the company reported revenues of $46,000 and expenses of $30,000. In addition, dividends for the year totaled $20,000. Assuming no other changes to retained earnings, the balance in the retained earnings account at the end of the year would be:

a. $116,000.

b. $136,000.

c. $24,000.

d. $96,000.

e. $104,000.

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  1. 22 March, 05:37
    0
    correct option is d. $96,000

    Explanation:

    given data

    Total Assets = $225,000

    Total Liabilities = $100,000

    Common Stock, $25,000

    Retained Earnings = $100,000

    to find out

    balance in the retained earnings account at the end of the year

    solution

    we apply here equation of Retained earnings Ending balance that is

    Retained earnings Ending balance = Retained earnings Beginning balance + Net income - Dividends ... 1

    and we know that net income is here

    Retained earnings Ending balance = Retained earnings Beginning balance + (Revenues - Expenses) - Dividends

    so put here value

    Retained earnings Ending balance = 100,000 + (46,000 - $30,000) - 20,000

    so

    Retained earnings Ending balance will be = 100,000 + 16,000 - $20,000

    Retained earnings Ending balance is = $96,000

    so correct option is d. $96,000
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