Question

Net Income $1,200 ($500) $2,300 Net Cash Flows $500 $300 $2,800 Dividends $200 $0 $200 Issuance of Stock $2,000 $0 $0 The above amounts represent totals from the first three years of operations. Calculate the balance of Retained Earnings at the end of 2018.

Answer 1

$2,600

Step-by-step explanation:

The computation of the balance of Retained Earnings at the end of 2018 is shown below;

= net income - dividend

= $1,200 - $500 + $2,300 - $200 - $0 - $200

= $2,600

We simply deduct the dividend amount from the net income so that the balance of the retained earning could come