Final answer:
The balance in Retained Earnings appearing on the statement of shareholders' equity on December 31, 20XX is $305,000.
Step-by-step explanation:
The balance in Retained Earnings appearing on the statement of shareholders' equity on December 31, 20XX can be calculated by starting with the beginning balance in Retained Earnings and then adding the net income for the year, and subtracting any dividends declared.
In this case, we start with a beginning balance of $275,000.
We then add the net income of $120,000, which gives us a balance of $395,000.
Finally, we subtract the cash dividends of $50,000 and the market value of the stock dividends of $40,000 to get a final balance of $305,000.