Question

A​ company's balance of retained earnings on January 1 was $ 20 million. During the​ year, sales revenue was $ 70 ​million, while expenses totaled $ 30 million. The company declared and paid $ 6 million in cash dividends during the year. What was the balance of retained earnings at the end of the​ year?

Answer 1

$54 million

Step-by-step explanation:

The computation of the balance of retained earnings at the end of the​ year is shown below:

The ending balance of retained earning = Beginning balance of retained earnings + net income earned - cash dividend paid

= $20 million + $40 million - $6 million

= $54 million

The net income is

= Sales revenue - expenses incurred

= $70 million - $30 million

= $40 million