Question

Retained earnings, December 31, 2019 $ 357,510
Decrease in total liabilities during 2019 77,860
Gain on the sale of buildings during 2019 27,370
Dividends declared and paid in 2019 7,650
Proceeds from sale of common stock in 2019 83,980
Net income for the year ended December 31, 2019 38,420
Required:
a. From the above data, calculate the retained earnings balance as of December 31, 2018. (Enter decreases with a minus sign to indicate a negative financial statement effect.)

Answer 1

Answer:

$326,740

Explanation:

Data provided in the question:

Retained earnings, December 31, 2019 = $ 357,510

Decrease in total liabilities during 2019 = $77,860

Gain on the sale of buildings during 2019 = $27,370

Dividends declared and paid in 2019 = $7,650

Proceeds from sale of common stock in 2019 = $83,980

Net income for the year ended December 31, 2019 = $38,420

Now,

Only the Dividends and Net Income is considered for calculating the retained earnings

Therefore,

Retained Earnings, December 31, 2018

= Retained earnings, December 31, 2019 - Net income for the year ended December 31, 2019 + Dividend declared and paid

= $357,510  - $38,420 + $7,650

= $326,740