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Elston Company compiled the following financial information as of December 31, 2017: Service revenue $700,000 Common stock 180,000 Equipment 240,000 Operating expenses 750,000 Cash 210,000 Dividends 60,000 Supplies 30,000 Accounts payable 120,000 Accounts receivable 90,000 Retained earnings, 1/1/17 450,000
Elston's retained earnings on December 31, 2017 are:

Respuesta :

TomShelby

Answer:

Elston's retained earnings on December 31, 2017 are:  340,000

Explanation:

We are asked for ending Retained Earnings that is Calculate as follows:

[tex]$Beginning Retained Earnings$$+/- Net Income or Net Loss$$- Dividends$$Equals Ending Retained Earning[/tex]

So our first step would be to know net income:

[tex]$Net Income = Revenue - Expenses[/tex]

Revenue = 700,000 Expenses = 750,000

Net Loss = 50,000

Now, along with the other givens. We are able to calculate the Ending Retained Earnings

Dividends = 60,000

Beginning Retained Earnings = 450,000

[tex]450,000 - 50,000 - 60,000 = 340,000[/tex]

The ending RE is 340,000

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