Question

The following selected amounts are available for Waterway Company: Retained Earnings (beginning balance) $1,050 Net loss 150 Cash dividends declared 100 Stock dividends declared 100 What is its ending Retained Earnings balance?

Answer 1

Answer:

Ending retained earnings balance is 700.

Explanation:

In order to find the ending retained earnings we will have to start from the beginning retained earnings. The beginning retained earnings are 1050. Because the company has a net loss of 150 we will subtract 150 from 1050. And we are left with 900. After this we will subtract the 100 cash dividends as these are also paid from the retained earnings that the company has so we are left with 800. Also the company pays a stock dividend worth 100 so we will also subtract that and are left with 700. So the ending retained earnings balance is 700.