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A company had the following revenues, expenses and dividends in its first three years of operations: Revenues Year 1 $12,000

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Answer #1
Balance of Retained Earnings at the end of third year 13000
Workings:
Year 1:
Net income 4500 =12000-7500
Less: Dividends 1000
Retained Earnings, Year 1 3500
Year 2:
Retained Earnings, Year 1 3500
Net income 6000 =20000-14000
Less: Dividends 2000
Retained Earnings, Year 2 7500
Year 3:
Retained Earnings, Year 2 7500
Net income 8500 =30000-21500
Less: Dividends 3000
Retained Earnings, Year 3 13000
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