Question

Refer to the data below. Retained earnings, December 31, 2022 $ 346,800 Cost of buildings purchased during 2023 46,100 Net income for the year ended December 31, 2023 56,200 Dividends declared and paid in 2023 32,700 Increase in cash balance from January 1, 2023, to December 31, 2023 23,500 Increase in long-term debt in 2023 44,600 Required: From the above data, calculate the Retained Earnings balance as of December 31, 2023.

Answer 1

The Retained Earnings balance as of December 31, 2023, is $393,600.

Explanation:

Retained earnings can be calculated by adding the net income for the period and subtracting the dividends declared and paid out during that period, along with any adjustments related to other changes.

Given:

Retained Earnings, December 31, 2022 = $346,800

Net Income for the year ended December 31, 2023 = $56,200

Dividends declared and paid in 2023 = $32,700

To find Retained Earnings as of December 31, 2023:

1. Start with the Retained Earnings balance as of December 31, 2022: $346,800

2. Add the net income for the year 2023: $56,200

3. Subtract the dividends declared and paid in 2023: $32,700

`\[ \text{Retained Earnings, Dec 31, 2023} = \text{Retained Earnings, Dec 31, 2022} + \text{Net Income 2023} - \text{Dividends 2023} \]\[ \text{Retained Earnings, Dec 31, 2023} = 346,800 + 56,200 - 32,700 = 370,300 \]`

Therefore, the Retained Earnings balance as of December 31, 2023, is $370,300.