Question

The Hastco Company had the following balances in their stockholders' equity accounts as of December 31, 2010: Paid-in Capital: $53,000 Retained Earnings: $31,000 During the year ended December 31, 2010, the Hastco Company generated $36,000 in net income, and declared and paid $16,000 in Dividends. The ending balance in the retained earnings account at December 31, 2009 was:

Answer 1

Answer:

The ending balance in the retained earnings account on December 31, 2009 was $11,000

Explanation:

For computing the retained earnings balance on December 31, 2009, the following equation should be used which is shown below:

= Ending retained earnings + dividend paid - net income

= $31,000 + $16,000 - $36,000

= $11,000

Since we have to find out the beginning retained earning so we add the dividend amount and deduct the net income amount

If we find out the ending balance of December 31, 2010, than we add the net income and deduct the dividend amount.

Hence, the ending balance in the retained earnings account on December 31, 2009, was $11,000