Question

On January 1, 2014, Aster Motors Inc.’s retained earnings were $57,000. During the year, it paid dividends of $32,000 and earned a net income of $30,000. What is the retained earning of Aster Inc. for the year that ended December 31, 2014? A. $55,000 B. $59,000 C. $112,000 D. $25,000

Answer 1

A. 55,000

Step-by-step explanation:

Answer 2

A. $55,000

Step-by-step explanation:

Retain earning in the end of the year is calculated by:

RE = BRE + NI ( Loss) – PD

where:

• RE= Retained earning in the end of period
• BRE= Beginning period of Retained earning
• NI = Net Income
• PD= Paid dividend ( including Cash dividend and Stock dividend)

Thus:

RE = 57,000 + 30,000-32,000 = $55,000