Question

Dayton Corporation began the current year with a retained earnings balance of $18,168. During the year, the company corrected an error made in the prior year, which was a failure to record a depreciation expense of $2,628 on equipment. Also, during the current year, the company earned net income of $16,142 and declared cash dividends of $6,550. Compute the year-end retained earnings balance.

a.$27,760
b.$18,168
c.$43,488
d.$25,132

Answer 1

d.$25132

Step-by-step explanation:

18,168-2,628=15540

15540+16,142=31682

31682-6550=25132

Answer 2

The year-end retained earnings balance is d)$25,132.

Step-by-step explanation:

To calculate the year-end retained earnings balance, we need to consider the changes to the beginning balance, net income, dividends, and any adjustments made.

Beginning balance: $18,168

Net income: $16,142

Correction for prior year's error: -$2,628

Dividends: -$6,550

Year-end retained earnings balance = Beginning balance + Net income + Correction for prior year's error - Dividends

Year-end retained earnings balance = $18,168 + $16,142 - $2,628 - $6,550 = $25,132

Therefore, the year-end retained earnings balance is $25,132 (option d).