Question

Elston Company compiled the following financial information as of December 31, 2017: Service revenue $700,000 Common stock 180,000 Equipment 240,000 Operating expenses 750,000 Cash 210,000 Dividends 60,000 Supplies 30,000 Accounts payable 120,000 Accounts receivable 90,000 Retained earnings, 1/1/17 450,000

Elston's retained earnings on December 31, 2017 are:

Answer 1

Elston's retained earnings on December 31, 2017 are: 340,000

Step-by-step explanation:

We are asked for ending Retained Earnings that is Calculate as follows:

`$$Beginning Retained Earnings$$$+/- Net Income or Net Loss$$$- Dividends$$$Equals Ending Retained Earning`

So our first step would be to know net income:

`$$Net Income = Revenue - Expenses`

Revenue = 700,000 Expenses = 750,000

Net Loss = 50,000

Now, along with the other givens. We are able to calculate the Ending Retained Earnings

Dividends = 60,000

Beginning Retained Earnings = 450,000

`450,000 - 50,000 - 60,000 = 340,000`

The ending RE is 340,000