Question

Retained earnings, december 31, 2015 $ 313,700 cost of equipment purchased during 2016 32,000 net loss for the year ended december 31, 2016 4,850 dividends declared and paid in 2016 17,000 decrease in cash balance from january 1, 2016, to december 31, 2016 13,700 decrease in long-term debt in 2016 17,000 required: from the above data, calculate the retained earnings balance as of december 31, 2016. (deductible amounts should be indicated by a minus sign.)

Answer 1

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Answer 2

The retained earnings are affected by the net income or loss or any amount paid to the shareholders as dividends. The retained earnings balance as of December 31, 2016 shall be calculated as follows:

Retained earnings, December 31, 2015                               $ 313,700

Less:  Net loss for the year ended December 31, 2016     -$4,850

Less: Dividends declared and paid in 2016                       -$17,000

Retained earnings, December 31, 2016                              $291,850

Hence, the retained earnings balance as of December 31, 2016 is $291,850