Answer:
Retained earnings at the beginning of Year 2 is $2,950.
Explanation:
Given the following:
Retained earnings at the end of Year 2 = $3,350
Revenue earned by the company in Year 2 = $3,600
Expenses paid during the period = $1,900
Dividends paid during the period = $1,300
Retained earning for year 2 = Revenue earned by the company in Year 2 - Expenses paid during the period - Dividends paid during the period = $3,600 - $1,900 - $1,300 = $400
Retained earnings at the beginning of Year 2 can be using the following formula:
Retained earnings at the end of Year 2 = Retained earnings at the beginning of Year 2 + Retained earning for year 2 .......... (1)
Substituting the values into equation (1) and sole for Retained earnings at the beginning of Year 2, we have:
$3,350 = Retained earnings at the beginning of Year 2 + $400
Retained earnings at the beginning of Year 2 = $3,350 - $400 = $2,950
Therefore, retained earnings at the beginning of Year 2 is $2,950.
