Answer:
Explanation:
1. Please refer to the attached file.
2. The vertical analysis indicates that the costs other than selling expenses (cost of goods sold and administrative expenses) decreased as a percentage of sales. As a result: net income as a percentage of sales increased by 2.5 percentage points. The sales promotion campaign appears to have been increased. While selling expenses as a percent of sales increased slightly, the decreased cost was more than made up for by increased sales.
<u>Given:</u>
Beginning retained earnings = $217,000
Revenues = $417,000
Expenses = $358,500
Dividends = $12,700
<u>To find:</u>
Ending retained earnings
<u>Solution:</u>
To calculate the ending retained earnings first we have to calculate the net income of the company. The formula to calculate the net income is as follows,
On plugging in the values in the above formula we get,
The formula to calculate the ending retained earnings is as follows,
Therefore, the retained earnings on the balance sheet as of December 31, 2016 will be $262,800 that is option c.