Question

What is the ending balance in retained earnings after accounting for a beginning balance of $43,200, net income of $6,200, and cash dividends declared and paid of $5,675?

A) $43,725
B) $43,725,425
C) $43,725
D) $43,725

Answer 1

To determine the ending balance in retained earnings, we start with the beginning balance ($43,200), add the net income ($6,200), and subtract the dividends paid ($5,675), which results in an ending balance of $43,725.

Step-by-step explanation:

The calculation of the ending balance in retained earnings involves accounting for the beginning balance, additions to the balance through net income, and subtractions from any dividends paid out. In this case, the beginning balance of retained earnings is $43,200, net income for the period is $6,200, and cash dividends paid are $5,675.

To find the ending balance, we add net income to the beginning balance and then subtract the dividends paid:

• Beginning balance of retained earnings: $43,200
• Net Income: +$6,200
• Cash Dividends Declared and Paid: -$5,675
• Ending Balance of Retained Earnings = ($43,200 + $6,200) - $5,675 = $43,725

Therefore, the correct answer is A) $43,725.