Question

For the year ending December 31, 2020, Splish Brothers Inc. reports net income $133,000 and cash dividends $90,000. Determine the balance in retained earnings at December 31 assuming the balance in retained earnings on January 1, 2020, was $230,000. (List items that increase retained earnings first.) Splish Brothers Inc. Retained Earnings Statement December 31, 2020 Balance, January 1 $ Less : Net Income / (Loss) Less : Dividends Balance, December 31 $

Answer 1

Therefore retained earnings at December 31 is $273,000

Step-by-step explanation:

Items that increase retail earnings include:

Beginning balance

Net income

Cash dividends

Beginning balance as at January 1,2020 = $ 230,000

Net income = $ 133,000

Cash dividends = ($90,000)

Therefore, retained earnings = Beginning balance + Net income -Cash dividends

= $230,000 + $133,000 - $90,000

= $ 273,000