Question

As of December 31, 2015, Juneau Company had total cash of $155,000, notes payable of $85,600, and common stock of $52,400. During 2016, Juneau earned $36,000 of cash revenue, paid $20,000 for cash expenses, and paid a $3,000 cash dividend to the stockholders. Assuming no change in notes payable and common stock, determine the amount of retained earnings as of December 31, 2016.

Answer 1

Answer:

ending RE 30,000

Explanation:

Using the acounting equation we solve for the beginning RE

Assets = liab + equity

155,000 = 85,600 + 52,400 + Retained Earnings

155,000 - 85,600 - 52,400 = 17,000

beginning RE 17,000

net income

revenues 36,000 - 20,000 expenses = 16,000

dividends: 3,000

ending RE: 17,000 + 16,000 - 3,000 = 30,000