Question

Blossom Company began the year with retained earnings of $390000. During the year, the company recorded revenues of $489000, expenses of $379000, and paid dividends of $44500. What was Blossom retained earnings at the end of the year?

a) 489000
b) 455500
c) 533500
d) 833500

Answer 1

b) $455,500

Explanation:

We have been given that Blossom Company began the year with retained earnings of $390000. During the year, the company recorded revenues of $489000, expenses of $379000, and paid dividends of $44500.

To find the retained earnings, we will use following formula.

`\text{Retained earnings}=\text{Retained earnings (Previous)+Revenue}-\text{Expenses}-\text{Dividends}`

Upon substituting our given values, we will get:

`\text{Retained earnings}=\$390,000+\$489,000-\$379,000-\$44,500`

`\text{Retained earnings}=\$879000-\$423,500`

`\text{Retained earnings}=\$455,500`

Therefore, the retained earnings at the end of the year was $455,500.