Question

Grason Corporation is preparing a budgeted balance sheet for 2018. The retained earnings balance at December 31, 2017 was $541,500. The 2018 budgeted income statement shows expected net income of $116,000. The company expects to declare dividends during 2018 amounting to $44,000. The expected balance in retained earnings on the 2018 budgeted balance sheet is:

Answer 1

The expected balance in retained earnings on the Grason Corporation's 2018 budgeted balance sheet would be $613,500, calculated by adding the beginning retained earnings to the net income and subtracting the dividends.

Step-by-step explanation:

The expected balance in retained earnings on the 2018 budgeted balance sheet for Grason Corporation can be calculated by taking the retained earnings balance at December 31, 2017, and adding the expected net income for 2018, and then subtracting the dividends that the company expects to declare in 2018. This calculation is based on the following formula: Ending Retained Earnings = Beginning Retained Earnings + Net Income - Dividends.

Using the figures given:

So, the calculation would be:

Ending Retained Earnings = $541,500 + $116,000 - $44,000

Ending Retained Earnings = $613,500

Therefore, the expected balance in retained earnings on the 2018 budgeted balance sheet would be $613,500.

Answer 2

$613,500

Step-by-step explanation:

The computation of the ending retained earnings balance is shown below:

The ending balance of retained earning = Beginning balance of retained earnings + net income - dividend paid

= $541,500 + $116,000 - $44,000

= $613,500

We simply added the net income and deducted the dividend paid to the beginning balance of retained earning so that the accurate amount can come