Question

Paulson Company began the year with retained earnings of $500,000. During the year, the company issued $720,000 of common stock, recorded expenses of $2,000,000, and paid dividends of $80,000. If Paulson’s ending retained earnings was $520,000, what was the company's revenue for the year?

Answer 1

Answer:

Revenue for the period = $2,100,000

Explanation:

Provided information,

Opening balance of retained earnings = $500,000

Expenses recorded for the period = $2,000,000

Dividends paid during the period = $80,000

Closing balance of retained earnings = $520,000

Therefore increase in retained earnings = $520,000 - $500,000 = $20,000

Earnings for the period - Expenses for the period - Dividend for the period = $20,000

Now, putting values in above,

Earnings - $2,000,000 - $80,000 = $20,000

Earnings = $20,000 + $80,000 + $2,000,000 = $2,100,000

Revenue for the period = $2,100,000