Question

The following amounts represent totals from the first three years of operations. Calculate the balance of Retained Earnings at the end of 2021.
Years Net Income (loss) ($) Net Cash Flow ($) Devidens ($) Insurance of Stock ($)
2019 1,200 500 200 2,000
2020 500 300 0 0
2021 2,300 2,800 200 0

(A) $2,600
(B) $4,600
(C) $3,100
(D) $3,500.

Answer 1

Answer:

D. $3,500

Explanation:

we must focus on the result of the year and the dividends paid, since these decrease the  Retained Earnings

Cash flow has no impact and the insurance of stock  is within the result of the year

2019, income was 1200 less dividends allocated

200

Retained Earnings= 1000

2020 result of 500 without dividend distribution

Retained Earnings= 500

2021 result of 2300 and distribution of dividends by 300

Retained Earnings= 2000

Total Retained Earnings= 3500