56 Peach Corporation began the year with Retained Earnings o

56. Peach Corporation began the year with Retained Earnings of $45,000. During the year Peach had Net Income of $15,000. Also, during the year Peach issued 4,000 share of $10 par value Common Stock for $12 per share. At the end of the year, Peach declared cash dividends of $8,000. What is the year-end balance of Retained Earnings? *a. $ 52,000 b. $ 68,000 c. 60,000 d. none of the above

Solution

The correct choice is a

Year end retained earnings = Net income + began year retained earnings - declared cash dividends

Year end balance retained earnings = $ 15,000 + $ 45,000 - $ 8000

Year end balance retained earnings = $ 52,000