Question

january 1, 2017, assembly system corporation's retained earnings account had a balance of $675,000. during 2017, cash dividends of $25,000 and stock dividends with a market value of $55,000 were declared and distributed. assembly system corporation had a net loss of $5,000 in 2017. what is the balance in retained earnings that would appear on assembly system corporation's statement of shareholders' equity on december 31, 2017?

Answer 1

The retained earnings balance for Assembly System Corporation at the end of December 31, 2017, would be $590,000 after accounting for dividends declared and the net loss.

Step-by-step explanation:

The calculation of the ending balance in retained earnings for Assembly System Corporation for the year ending December 31, 2017, can be done by adjusting the beginning balance with the declared dividends and the reported net loss for 2017.

Here is the step-by-step computation:

1. Start with the beginning retained earnings balance: $675,000.
2. Subtract cash dividends declared: $675,000 - $25,000 = $650,000.
3. Subtract stock dividends declared: $650,000 - $55,000 = $595,000.
4. Adjust for the net loss: $595,000 - $5,000 = $590,000.

The ending balance in retained earnings on December 31, 2017, would therefore be $590,000.