Question

On January 1, Bennett Corporation had Retained Earnings of $650,000. During the year, Bennett Corporation had the following selected transactions: declared cash dividends of $100,000; corrected overstatement of prior year net income because of depreciation error of $50,000; earned net income of $400,000; and declared stock dividends of $50,000. The ending balance for Retained Earnings is:

Answer 1

$850,000

Step-by-step explanation:

To determine the ending balance for Retained Earnings account we must follow this equation:

= retained earnings at the beginning of the year - cash dividends - overstatement corrections + earned net income - stock dividends

$650,000 - $100,000 - $50,000 + $400,000 - $50,000 = $850,000

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