Question

Wildhorse Co. began the year 2022 with retained earnings of $651000. During the year, the company sold additional shares of stock for $1017000, recorded revenues of $649000, expenses of $376000, and paid dividends of $141000. What was Wildhorse's retained earnings balance at the end of 2022?

Answer 1

Answer:

$1,800,000

Explanation:

Equity which represents the amount owed to the owners of the business includes retained earnings (which is the accumulation of the net income/loss over the years less dividends paid) and common shares.

Ending retained earnings = Beginning retained earnings + additional stock issued + net income - dividend paid

= $651000 + $1017000 + $649000 - $376000 - $141000

= $1,800,000