Question

At the end of Year 2, retained earnings for the Baker Company was $1,850. Revenue earned by the company in Year 2 was $2,100, expenses paid during the period were $1,150, and dividends paid during the period were $550. Based on this information alone, retained earnings at the beginning of Year 2 was:

Answer 1

Answer

Retained earnings at the beginning of Year 2 was: $1,450

Explanation

Revenue = $2,100

Retained Earnings Closing Balance = $1,850

Expenses = $1,150

Dividends = $550

Retained Earnings Closing Balance = Revenue - Expenses - Dividends + Retained Earning Beginning Balance

$1,850 = $2,100 - $1,150 - $550 + Retained Earning Beginning Balance

Retained Earning Beginning Balance = $1,450