Question

Ayayai Company started the year with $56400 in its Common Stock account and a balance in Retained Earnings of $41400. During the year, the company earned net income of $45100 and declared and paid $18800 of dividends. In addition, the company sold additional common stock amounting to $26300. As a result, the amount of its retained earnings at the end of the year would be

Answer 1

Answer: See Explanation

Step-by-step explanation:

Based on the information that is given in the question, the amount of the company's retained earnings at the end of the year would be:

Ending retained earnings is calculated as:

= Beginning retained earnings + the net income - dividends

= $41400 + $45100 - $18800

= $67700

Assuming the opening retained earnings was debit, this would be:

= -$41400 + $45100 - $18800

= -$15100