Question 1 (of 10) Lena Company has provided the following data (ignore income t

Question

Question 1 (of 10) Lena Company has provided the following data (ignore income taxes) 2016 revenues were $87,000. 2016 expenses were $49,600. Dividends declared and paid during 2016 totaled $8,700 Total assets at December 31, 2016 were $195,000. Total liabilities at December 31, 2016 were $125,000. Common stock at December 31, 2016 was $37,000. Which of the following is correct? O Retained earnings at December 31, 2016 were $28,700. O Retained earnings at December 31, 2016 were $33.000. O 2016 net income was $28,700 O Total stockholders' equity at December 31, 2016 was $254000.

Explanation / Answer

Net income=Total revenue-Total expenses

=(87000-49600)=$37400

Total assets=Total liabilities+Total equity

Hence total equity at December 31,2016=(195000-125000)=$70000

Hence total equity=Common stock+Ending retained earnings

Ending retained earnings=(70000-37000)=$33000

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

33000=Beginning retained earnings+37400-8700

Beginning retained earnings=(33000+8700-37400)=$4300

Hence the correct option is B.

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