19 On 1 January 2011 Scott Pty Ltd started the year with a 2

19. On 1 January 2011, Scott Pty. Ltd, started the year with a $200,000 credit balance in the retained earnings account. During 2011, the company earned net income of $70,000 and declared and paid dividends of $10.000. Also, the company received cash of $15,000 as an additional investment by its owners. Therefore, the ba ined earnings on 31 December 2011, would be: a. $200,000 b. $215,000 c. $245,000 d. $260,000 Ca

Solution

Answer

Beginning Balance

$            200,000.00

Add:

Net Income

$       70,000.00

$ 70,000.00

Less:

Dividends

$                10,000.00

Ending Balance [ 200000 + 70000 – 10000]

$            260,000.00

Beginning Balance		$            200,000.00
Add:
Net Income	$       70,000.00	$ 70,000.00
Less:
Dividends		$                10,000.00
Ending Balance [ 200000 + 70000 – 10000]		$            260,000.00