Question

Metlock, Inc. began the year with retained earnings of $402000. During the year, the company recorded revenues of $487000, expenses of $384000, and paid dividends of $38500. What was Metlock's retained earnings balance at the end of the year

Answer 1

Answer:

$466,500

Explanation:

Assuming Metlock, Inc is free of tax, tax rate = 0%

Net profit of the year = (revenues - expenses) * (1- tax rate)

=  $487,000 - $384,000 = $103,000

Retained earnings balance at the end of the year

= Retained earnings balance at beginning of the year + net profit - dividend paid

= $402,000 + $103,000 - $38500

= $466,500