Question

Crawford Company started the year with $30,000 in its Common Stock account and a credit balance in Retained Earnings of $22,000. During the year, the company earned net income of $24,000 and declared and paid $10,000 of dividends. In addition, the company sold additional common stock amounting to $14,000. As a result, the amount of its retained earnings at the end of the year would be

Answer 1

Answer:

$36,000

Explanation:

Given that,

Beginning retained earnings = $22,000

Beginning Common Stock account = $30,000

Net income = $24,000

Dividend declared and paid = $10,000

Ending retained earnings:

= Beginning retained earnings + Net income - Dividends paid

= $22,000 + $24,000 - $10,000

= $36,000

Therefore, the amount of its retained earnings at the end of the year would be $36,000.