Question

The first year of operations for a company was Year 1. The net income for Year 1 was $21,200 and dividends of $12,600 were paid. In Year 2, the company reported net income of $35,200 and paid dividends of $5,600. At the end of Year 1, the company had total assets of $162,000. At the end of Year 2, the company had total assets of $ $252,000.What was the amount of retained earnings at the end of Year 1?

Answer 1

$8,600

Step-by-step explanation:

The net income year 1 was $21,200

The dividend paid in year 1 was $12,600

Therefore the retained earnings at the end of year 1 can be calculated as follows

= beginning retained earnings + net income - Dividend

= $0 + $21,200-$12,600

= $21,200 - $12,600

= $8,600

Hence the retained earnings at the end of year 1 is $8,600