Question

At the end of 2016, retained earnings for the Baker Company was $2,750. Revenue earned by the company in 2016 was $3,000, expenses paid during the period were $1,600, and dividends paid during the period were $1,000. Based on this information alone, retained earnings at the beginning of 2016 was

-$1,350.
-$6,000.
-$3,150.
-$2,350.

Answer 1

Retained earnings at the beginning of 2016 was $350.

Step-by-step explanation:

Retained earnings at the beginning of 2016 can be calculated using the formula:

Retained earnings = Beginning retained earnings + Revenue - Expenses - Dividends

Given that retained earnings at the end of 2016 was $2,750, revenue earned was $3,000, expenses paid were $1,600, and dividends paid were $1,000, we can substitute these values into the formula:

$2,750 = Beginning retained earnings + $3,000 - $1,600 - $1,000

By rearranging the equation, we can find the value of beginning retained earnings:

Beginning retained earnings = $2,750 - $3,000 + $1,600 + $1,000

This simplifies to:

Beginning retained earnings = $350

Therefore, retained earnings at the beginning of 2016 was $350.