Question

Cullumber Construction Company earned $400,000 during the year ended June 30, 2017. After paying out $225,794 in dividends, the balance went into retained earnings. If the firm's total retained earnings were $841,936 at the end of fiscal year 2017, what were the retained earnings on its balance sheet on July 1, 2016

Answer 1

Opening balance of retained earnings is $667,730

Step-by-step explanation:

The balance of retained earnings at the the end is the sum of opening balance, profit earned and less dividend payment for the period

Retained earnings at the end = Opening balance + profit - dividend

let y represent the opening balance

841, 936 = y + 400,000 - 225,794

y= 841, 936-400,000 + 225,794

y= $667,730

Opening balance of retained earnings = balance sheet on July 1, 2016 is $667, 730