Montana Incorporated began the year with a retained earnings balance of $50,000. The company paid a total of$5,000 in dividends and experienced a net loss of $25,000 this year. What is the ending retained earnings balance? FindFindarrow_forward Principles of Accounting Volume 1 19th Edition OpenStax Publisher: OpenStax College ISBN: 9781947172685 Solutions Chapter Section FindFindarrow_forward Principles of Accounting Volume 1 19th Edition OpenStax Publisher: OpenStax College ISBN: 9781947172685 Chapter 14, Problem 16EA Textbook Problem 1 views Montana Incorporated began the year with a retained earnings balance of$50,000. The company paid a total of $5,000 in dividends and experienced a net loss of$25,000 this year. What is the ending retained earnings balance?

To determine

To compute:

Ending balance of retained earnings.

Introduction:

Retained earnings defined as the ploughing back of net profits with the aim to reinvest in business or to meet the contingent liabilities. It is the primary component of the company’s earned income.

Explanation of Solution

Calculation of ending retained earning balance:

Formula to calculate the ending retained earning balance:

EndingRetainedEarning Balance=(RetainedEarningBalanceNetLossDividendPayment)

Substitute $50,000 for retained earning balance,$25,000 for net loss and \$5,000 for dividend payment in the above formula

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