Question

Question 15 1 pts On December 31 of year 1, Acme Company had assets of $149,271, liabilities of $97,696, and capital stock of $28,643. During year 2. Acme earned revenues of $44,563 and incurred expenses of $33,270. During year 2 the firm declared and paid Dividends amounting to $3,199. Compute the company's retained earnings on December 31 of year 1.

Answer 1

We can find retained earnings for year-1 with Balance equation:

$\textup{Liabilities + Capital Stock + retained earnings = Assets}$

Putting the values:

$\textup{97,696 + 28,643 + retained earnings = 149,271}$

$\textup{126,339 + retained earnings = 149,271}$

$\textup{retained earnings = 149,271 - 126,339}$

$\bg_green \large \textup{retained earnings = \$22,932}$

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