Question

The accountant for TI Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available:

Retained earnings balance at the beginning of the year $166,000
Cash dividends declared for the year 52,000
Net income for the year 99,500.

What is the ending balance for retained earnings?

Answer 1

The ending balance for retained earnings is calculated by starting with the beginning balance, adding the net income for the year, and subtracting the cash dividends declared. For TI Company, this results in an ending retained earnings balance of $213,500.

Step-by-step explanation:

The ending balance for retained earnings can be calculated by adjusting the beginning balance by additions for net income and deductions for dividends declared. To arrive at the ending balance, we start with the beginning retained earnings balance, add the net income for the year, and then subtract the cash dividends declared. Using the given information:

• Beginning retained earnings balance: $166,000
• Net income: $99,500
• Dividends declared: $52,000

We perform the following calculation:

Ending Retained Earnings = Beginning Retained Earnings + Net Income - Dividends Declared

Ending Retained Earnings = $166,000 + $99,500 - $52,000

Ending Retained Earnings = $265,500 - $52,000

Ending Retained Earnings = $213,500

Therefore, the ending retained earnings balance for TI Company would be $213,500.

Answer 2

$213,500.

Step-by-step explanation:

Retained earnings balance at the beginning of the year $ 166,000

- Cash dividends declared for the year 52,000

+ Net income for the year 99,500