Question

Retained earnings, December 31, 2019 $342,500

Cost of buildings purchased during 2020 49,000
Net income for the year ended December 31, 2020 55,900
Dividends declared and paid in 2020 32,000
Increase in cash balance from January 1, 2020, to December 31, 2020 22,000
Increase in long-term debt in 2020 44,500

Required:
From the above data, calculate the Retained Earnings balance as of December 31, 2020.

Answer 1

the retained earnings balance as on Dec 31,2020 is $72,900

Step-by-step explanation:

The computation of the retained earnings balance as on Dec 31,2020 is given below:

Ending retained earning balance = Opening retained earnings + net income - dividend paid

= $49,000 + $55,900 - $32,000

= $72,900

hence, the retained earnings balance as on Dec 31,2020 is $72,900