Question

Grason Corporation is preparing a budgeted balance sheet for 2018. The retained earnings balance at December 31, 2017 was $541,500. The 2018 budgeted income statement shows expected net income of $116,000. The company expects to declare dividends during 2018 amounting to $44,000. The expected balance in retained earnings on the 2018 budgeted balance sheet is:

Answer 1

Answer:

$613,500

Explanation:

The computation of the ending retained earnings balance is shown below:

The ending balance of retained earning = Beginning balance of retained earnings + net income - dividend paid

= $541,500 + $116,000 - $44,000

= $613,500

We simply added the net income and deducted the dividend paid to the beginning balance of retained earning so that the accurate amount can come