Glassgow Inc began the year with a balance in retained earni

Glassgow, Inc. began the year with a balance in retained earnings of $21,000 and 40,000 shares of $1 par common stock outstanding. During the year, the company reported sales of $122,500, expenses of $101,000, and declared and paid a $0.20 per share cash dividend.

How much is the balance in the Retained Earnings account at the end of the year?

Select one:

A. $34,500

B. $54,500

C. $42,500

D. $13,500

Solution

Answer is A $ 34500.

Opening Balance in Retained Earnings = $ 21000

Add: Profit for the year ( 122500-101000) = $ 21500

Less: Dividend Paid ( 40000*1*0.20) = ($ 8000)

Ending balance of Retained Earnings = $34500