Financial Accounting: Spring 2018 Section pter 5 &7 Quiz instructions help Quest

Question

Financial Accounting: Spring 2018 Section pter 5 &7 Quiz instructions help Question 1 (of 10) Save &Exit; Submit ers' equity for 2016. On January 1, 2016, Panmar started the year with a $200,000 credit balance in its retained eamings eccount. During 2016, the company earned net income of $140,000. Panmar declared dividends of $80,000 and paid $50,000 of those dividends. Also, the company l shares of common stock issued and then paid $30,000 to repurchase shares of common stock. What is the balance in retained earnings on December 31, 2016? O $290.000 O $330,000 O $390.000 6

Explanation / Answer

SOLUTION

1. Balance in Retained earnings on December 31, 2016 is $260,000.

Retained Earnings on December 31, 2016 =

= Retained Earnings on January 1, 2016 + Net Income - Dividend declared

= $200,000 + $140,000 - $80,000

= $260,000

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