Final answer:
The balance in Retained Earnings at December 31, 20XX for Elena’s Store is calculated by taking the beginning balance, adding the net income for the year, and subtracting any dividends paid. The net income is the difference between revenues and expenses. With a starting balance of $100,000, revenues of $80,000, expenses of $45,000, and dividends of $20,000, the ending balance is $115,000.
Step-by-step explanation:
The balance in Retained Earnings at December 31, 20XX for Elena’s Store can be calculated using the following formula:
Beginning Retained Earnings + Net Income – Dividends = Ending Retained Earnings
Net Income is calculated by subtracting expenses from revenues. In this case, Elena’s Store had revenues of $80,000 and expenses of $45,000. Therefore, the Net Income for the year is $80,000 - $45,000 = $35,000.
To find the Ending Retained Earnings, we will use the beginning balance of $100,000 and subtract the dividends paid, which are $20,000, then add the Net Income calculated above.
Ending Retained Earnings = $100,000 + $35,000 - $20,000
Ending Retained Earnings = $115,000
Thus, the balance in Retained Earnings at December 31, 20XX for Elena’s Store is $115,000.