Question

Refer to the data below.

Retained earnings, December 31, 2019	$	346,000
Cost of buildings purchased during 2020		48,000
Net income for the year ended December 31, 2020		56,600
Dividends declared and paid in 2020		32,600
Increase in cash balance from January 1, 2020, to December 31, 2020		23,200
Increase in long-term debt in 2020		45,600

Required:
From the above data, calculate the Retained Earnings balance as of December 31, 2020:

Answer 1

Beginning retained earnings (Dec 31, 2019) = $346,000

Net income = $56,600

Dividend declared = $32,600

Ending retained earnings (Dec 31, 2020)

= Beginning retained earnings (Dec 31, 2019) + Net income - Dividend declared

= $346,000 + $56,600 - $32,600

= $370,000