Question

A corporation had a year end 2004 retained earnings balance of $220,000. the firm reported net profits after taxes of $50,000 in 2005 and paid dividends in 2005 of $30,000. the firm's retained earnings balance at year end 2005 was _________. group of answer choices $240,000 $250,000 $270,000 $300,000

Answer 1

To calculate the retained earnings balance at the end of 2005, add the net profits after taxes and subtract the dividends paid. The correct retained earnings balance at the end of 2005 is $240,000.

Step-by-step explanation:

To calculate the retained earnings balance at the end of 2005, we need to consider the net profits after taxes and the dividends paid.

Starting with the year-end 2004 retained earnings balance of $220,000, we add the net profits after taxes of $50,000 for 2005. This brings the balance to $220,000 + $50,000 = $270,000.

We then subtract the dividends paid in 2005, which is $30,000. The final retained earnings balance at the end of 2005 is $270,000 - $30,000 = $240,000.

Therefore, the correct answer is $240,000.