Question

M Company had a retained earnings balance of $4,200 on June 30, 2010. For the fiscal year ended June 30, 2011, sales were $24,000 and expenses were $12,500. Cash dividends of $2,500 were declared and distributed on June 1, 2011. What was the amount of retained earnings on June 30, 2011

Answer 1

Answer: $13,200

Step-by-step explanation:

Retained earnings = Opening retained earnings + Net income - Dividends

Net income = Sales - Expenses

= 24,000 - 12,500

= $11,500

Retained earnings on June 30, 2011 are;

= 4,200 + 11,500 - 2,500

= $13,200