Question

A company had a beginning balance in retained earnings of $400,000. It had net income of $50,000 and declared and paid cash dividends of $55,000 in the current period. The ending balance in retained earnings equals: Multiple Choice O $505,000

Answer 1

Ans.	Option   3rd   $395,000
	Explanations and Calculations: Dividends paid is deducted from the sum of beginning retained
	earnings and net income for the computation of ending retained earnings.
	Particulars	Amount
	Beginning balance of Retained earnings	$400,000
	Add: Net income	$50,000
	Less: Dividends paid	-$55,000
	Ending balance of Retained earnings	$395,000