Question

At December 31, 2017 Keen Company had retained earnings of $1,292,000. During 2017 they issued stock for $49,000, and paid dividends of $17,000. Net income for 2017 was $201,000. The retained earnings balance at the beginning of 2017 was

a. $1,476,000
b. $1,108,000
c. $1,157,000
d. $1,427,000

Answer 1

The retained earnings balance at the beginning of 2017 for Keen Company was $1,108,000.

Step-by-step explanation:

Retained earnings is a component of the shareholders' equity section of a company's balance sheet. It represents the accumulated net income that has not been paid out as dividends. To calculate the retained earnings balance at the beginning of 2017, we need to consider the changes in retained earnings during the year.

The formula to calculate the retained earnings balance at the beginning of the year is:

Beginning Retained Earnings + Net Income - Dividends = Ending Retained Earnings

Given that the ending retained earnings for 2017 is $1,292,000, the net income is $201,000, and the dividends paid are $17,000, we can rearrange the formula to solve for the beginning retained earnings:

Beginning Retained Earnings = Ending Retained Earnings - Net Income + Dividends

Beginning Retained Earnings = $1,292,000 - $201,000 + $17,000 = $1,108,000

Therefore, the retained earnings balance at the beginning of 2017 was $1,108,000.