Question

Metlock, Inc. began the year 2022 with retained earnings of $653000. During the year, the company sold additional shares of stock for $1009000, recorded revenues of $604000, expenses of $382000, and paid dividends of $134500. What was Metlock's retained earnings balance at the end of 2022?

Answer 1

The retained earnings at end of 2022 is $740,500

Step-by-step explanation:

In order to ascertain the balance of retained earnings at year end we need to first of all determine the net income in the current year.

The net income is sales revenue minus expenses

sales revenue is $604,000

expenses is $382,000

net income=$604,000-$382,000=$222,000

The closing retained earnings=opening retained earnings+net income-dividends

opening retained earnings is $653,000

dividends is $134,500

closing retained earnings=$653,000+$222,000-$134,500=$740,500