Question

Rossdale, Inc., had additions to retained earnings for the year just ended of $635,000. The firm paid out $80,000 in cash dividends, and it has ending total equity of $7.30 million. What is the beginning total equity of Rossdale, Inc.?

1) $6.585 million
2) $7.385 million
3) $7.220 million
4) $6.715 million

Answer 1

To find the beginning total equity of Rossdale, Inc., subtract the additions to retained earnings and add the cash dividends to the ending total equity.

Step-by-step explanation:

To find the beginning total equity of Rossdale, Inc., we can use the equation:

Beginning Total Equity = Ending Total Equity - Additions to Retained Earnings + Cash Dividends

Given that the additions to retained earnings were $635,000 and cash dividends were $80,000, and the ending total equity is $7.30 million, we can substitute these values into the equation:

Beginning Total Equity = $7.30 million - $635,000 + $80,000 = $6.745 million

Therefore, the beginning total equity of Rossdale, Inc. is $6.745 million.