account and a debit balance in Retained Earnings of $41000. During the year, the
ID: 2333294 • Letter: A
Question
account and a debit balance in Retained Earnings of $41000. During the year, the company earned net income of $20500 I common stock amounting to $25100. Based on this information, what should the transaction analysis show Corporation began the year with $95800 in its and declared and paid $6800 of dividends. tn addition, the compeny sold additional for the ending total of all stockholders' equity accounts? O $189200 O $175600 O $125400 $93600 Question Attempts: O of 1 used SAVE FOR LATERSUBMET ANSWER MacBook Air 6 8 0 5 9Explanation / Answer
Answer $93600
Closing Retained Earnings = Opening + net inocme - Dividend
= 41000(Debit) + 20500 - 6800 = 27300
Closing common stock = Opening + addition
= 95800 + 25100 = 120900
Closing Stockholders equity = 120900 - 27300 = 93600
Note: Retained earnings begin with a debit balance indicating the company has had a history of losses rather than profits. A debit balance rarely occurs except with new companies experiencing a slow start. This year’s income eliminates is enough to eliminate the debit balance in retained earnings and change it to a credit balance
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