Question

Suppose that company AA had retained earning of $20,000 on adjusted trial balance. Their net income was $10,000, and they paid dividends of $5,000 in that accounting period. How much is the balance of retained earning at the end of current accounting period

Answer 1

$25,000

Step-by-step explanation:

Data provided as per the question:-

Retained earning = $20,000

Net income = $10,000

Paid dividends = $5,000

The computation of balance of retained earning at the end of current accounting period is shown below:-

Balance of retained earning = Retained earning + Net income - Paid dividends

= $20,000 + $10,000 - $5,000

= $25,000