Question
Asked Nov 15, 2019
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Parrish 1-3 #1

Please show me how to find the ending balance of Retained Earnings.  Please use the equation and not a diagram to show and explain.

Revenue $8000

Dividends declared $1000

RE 1/1 $5000

RE 12/31 $ UNKOWN

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Expert Answer

Step 1
Retained earnings
Retained earmings are that portion of profits which are eamed by a company but not
distributed to stockholders in the form of dividends. These eamings are retained for various
purposes like expansion activities, or funding any future plans
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Retained earnings Retained earmings are that portion of profits which are eamed by a company but not distributed to stockholders in the form of dividends. These eamings are retained for various purposes like expansion activities, or funding any future plans

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Step 2
Calculate the ending balance of retained earmings
Beginning balance retained eanings
-Dividend
Ending balance of retained earnings =
Revenue
-$5,000+S8,000-S1000
=$13,000 $1000
=$12,000
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Calculate the ending balance of retained earmings Beginning balance retained eanings -Dividend Ending balance of retained earnings = Revenue -$5,000+S8,000-S1000 =$13,000 $1000 =$12,000

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