Question

Lori Corporation reported the following information for the year ended December 31, 2017:

Net income Dividends Retained earnings at December 31, 2017 10,000 6,000 25,000
What was the balance of Lori' retained earnings at January 1, 2017?
a. $21,000
b. $29,000
c. $35,000
d. $31,000

Answer 1

a. $21,000

Step-by-step explanation:

Opening retained earnings + net income - Dividend paid = closing retained earnings

Opening retained earnings = ?

Net income = $10,000

Dividend paid = $6,000

Closing retained = $25,000

Opening retained earnings + 10,000 - 6,000 = 25,000

Opening retained earnings = 25000 - 4000

= $21,000