Given the following facts about a company's prior calendar year: Revenues were \$500,000, Expenses were \$350,000, and Dividends paid were \$30,000. What is the ending balance of Retained Earnings if the beginning Retained Earnings was \$100,000?

• A. \$250,000
• B. \$180,000
• C. \$220,000
• D. \$120,000

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the formula for calculating the ending balance of Retained Earnings. The formula is: Ending Retained Earnings = Beginning Retained Earnings + Net Income - Dividends.
2. Step 2: Calculate Net Income using the formula: Net Income = Revenues - Expenses. Substitute the given values: Revenues = \$500,000 and Expenses = \$350,000.
3. Step 3: Subtract Dividends from the Net Income to account for the distribution to shareholders. Dividends paid are given as \$30,000.
4. Step 4: Add the Beginning Retained Earnings to the result from Step 3. The Beginning Retained Earnings is provided as \$100,000.
5. Step 5: Combine all the values calculated in the previous steps to determine the Ending Retained Earnings. Ensure all calculations follow the formula from Step 1.