Calculate the Ending Balance of Retained Earnings

What is the ending balance of retained earnings?

If the beginning balance of retained earnings is $180,000, revenue is $85,000, expenses total $35,000, and the company declares and pays a $20,000 dividend, what is the ending balance of retained earnings?

Answer:

The ending balance of Retained Earnings is $210,000

The ending balance of retained earnings can be calculated by considering the revenue, expenses, and dividend paid by the company.

The beginning balance of retained earnings is $180,000.

The revenue generated by the company is $85,000, and the total expenses amount to $35,000. This results in a net profit of $50,000 ($85,000 - $35,000).

Out of this net profit, $20,000 is paid out as a dividend, leaving $30,000 to be retained in the business.

Therefore, the closing Retained Earnings can be calculated as follows:

Beginning Balance + Net Profit - Dividend = Ending Balance

$180,000 + $30,000 = $210,000

Thus, the ending balance of Retained Earnings for the company is $210,000.