Question

Wave Corporation began the current year with a retained earnings balance of $25,000. During the year, the company corrected an error made in the prior year, which was a failure to record depreciation expense of $5,000 on equipment. Also, during the current year, the company earned net income of $15,000 and declared cash dividends of $5,000. Compute the year-end retained earnings balance.

Answer 1

Answer:

$30,000.

Step-by-step explanation:

Wave Corporation began the current year with a retained earnings balance of $25,000.

Depreciation expense was of $5000

During the current year, the company earned net income of $15,000

Also gave cash dividends of $5,000.

So, year end retained earnings will be :

Year end retained balance = total net income minus net losses and dividends.

$25000-5000+15000-5000=30000$ dollars

The answer is $30,000.