Question

A company's retained earnings at the beginning and ending of the accounting period were $100,000 and $120,000, respectively. Common stock at the end of the year was $90,000. If the company had dividends of $3,000 and revenues of $280,000, the amount of expenses must have been?

Answer 1

Expenses for the year = $257,000

Step-by-step explanation:

For the provided information we have,

Increase in balance of retained earnings = Closing balance - Opening balance = $120,000 - $100,000 = $20,000

Also this = Net income - Dividends

Net income = Revenue - Expenses

Therefore, we have

Revenues - Expenses - Dividend = Net increase in retained earnings

$280,000 - Expenses - $3,000 = $20,000

$280,000 - $3,000 - $20,000 = Expenses

$257,000 = Expenses for the year