Question

A company reports the information below for the years 2019 and 2020. What dollar amount will appear for Retained Earnings on the company's balance sheet as of year-end 2020? Note that some items might not be needed. Answer to the nearest dollar. Do not include the $ sign in your answer:

Cost of Goods Sold for 2020: 253,000

Current Assets as of 2020 year end: 192,000

Depreciation for 2020: 43,000

Dividends to shareholders for 2020: 42,000

Inventory as of 2019 year end: 71,000

Inventory as of 2020 year end: 78,000

Net income for 2019: 78,000

Net income for 2020: 113,000

Retained earnings as of 2019 year end: 588,000

Sales for 2019: 857,000

Sales for 2020: 912,000

Taxes (% of taxable income): 25%

Answer 1

The retained earnings as of year-end 2020 is $679,000.

Step-by-step explanation:

Retained Earnings represents the cumulative profits of a company that have been retained in the business rather than distributed to shareholders as dividends. It is calculated by adding net income and subtracting dividends over time.

In this case, we have the following relevant information:

Net income for 2019 is $78,000, and for 2020 it is $113,000.

Dividends paid to shareholders in 2020 amount to $42,000.

Retained earnings as of the end of 2019 is $588,000.

To calculate the retained earnings as of year-end 2020, we can use the formula:

Retained Earnings (2020) = Retained Earnings (2019) + Net Income (2020) - Dividends (2020)

Substituting the values, we get:

Retained Earnings (2020) = $588,000 + $113,000 - $42,000

= $679,000

Therefore, the dollar amount that will appear for Retained Earnings on the company's balance sheet as of year-end 2020 is $679,000.