From the following data, calculate the retained earnings balance as of December

Question

From the following data, calculate the retained earnings balance as of December 31, 2010.

Retained earnings, December 31, 2011..................................$490,000
Net decrease in total assets during 2011.................................$74,800
Net increase in accounts receiveable in 2011...........................$17,200
Dividends declared and paid in 2011.....................................$67,200
Proceeds from issuance of bonds during 2011...........................$176,800
Net loss for the year ended December 31,2011.........................$46,000

What is beginning retained earnings?

Explanation / Answer

Retained earnings normally consists of cumulative net earnings minus net losses and minus dividends declared. So you would take RE at the end of the year, add back in the net loss and the dividends: 490,000 + 46,000 + 67,200 = 603,200

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