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Retained Earnings

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3. The beginning balance of the Huskies, Inc. Retained Earnings account was $44,700 on January 1, 2002.

During the year, the following transactions took place:

a. Huskies sold $14,000 of merchandise inventory to customers on account for
$22,000.
b. Cash collection on these accounts amounted to $12,000.
c. Merchandise inventory costing $9,000 was purchased on account.
d. Additional common stock was sold to investors for $16,000.
e. Stockholders were paid $9,800 in dividends.

Assume that it is the end of the fiscal year and that the books have been closed. What amount should be reported for Retained Earnings on the December 31, 2002, Balance Sheet?

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Solution Preview

We first need to find out the net income.
From the data given
Sales.................................22,000
Cost of Goods ...

Solution Summary

The solution explains how to calculate the ending balance in the retained earnings account.

$2.19