Question

At the beginning of the year, Sigma Company's balance sheet reported Total Assets of $267,000 and Total Liabilities of $20,600 and Total Paid-in capital of $82,400. During the year, the company reported total revenues of $314,000 and expenses of $243,000. Also, dividends during the year totaled $64,000. Assuming no other changes to Retained earnings, the balance in the Retained earnings account at the end of the year would be: Multiple Choice $268,000 $232,000. $165,000. $168,000 $171,000

Answer 1

First, we need to calculate the retained earnings at the beginning of the year and then we will add the profit for the year and reduce.
the dividends during the year to compute the retained earnings at the end of year
Calculation of retained earnings at the beginning of the year
Total assets	$                  267,000
Less: total liabilities	$                   (20,600)
Less: paid in capital	$                   (82,400)
Retained earnings at the beginning of the year	$                  164,000
Calculation of net profit for the year
Total revenue	$                  314,000
Total expense	$                 (243,000)
Net profit for the year	$                    71,000
Calculation of retained earnings at the end of the year
Retained earnings at the beginning of the year	$                  164,000
Net profit for the year	$                     71,000
Less: dividend during the year	$                   (64,000)
Retained earnings at the end of the year	$                  171,000

So the last option is correct.