Question

2. For the fiscal year of 2017, Excel Sports Inc. had a net income of $255,000 and paid out $51,000 as common dividend. Meanwhile, the retained earnings in its 2017 Balance Sheet was $1,297,000. How much was the retained earnings in its 2016 Balance Sheet

Answer 1

Answer:

$1,093,000

Explanation:

Given the above information, retained earnings in the balance sheet for 2016 would be computed as;

Beginning retained earnings + Net income - Dividends = Ending retained earnings

Fixing in the values, then we'll have

Beginning retained earnings + $255,000 - $51,000 = $1,297,000

Beginning retained earnings = $1,297,000 - $255,000 + $51,000

Beginning retained earnings = $1,093,000

It therefore means that the sum of $1,093,000 is the retained earnings in Excel Sports Inc. 2016 balance sheet.