Question

Kamili Company had the following accounting balances for Year 1:

Account	Amount
Net Income	$25,000
Retained Earnings (beginning of the year)	40,000
Dividends	10,000
Unrealized Gain on Available-for-Sale Securities	18,000
Foreign Currency Translation Adjustment (increase)	4,000
Prior-period adjustment--correction of previously OVERstated employee training expense	20,000

The beginning retained earnings amount does NOT reflect any necessary adjustments. The correct ENDING retained earnings balance is which of the following figures?

	$75,000
	$35,000
	$93,000
	$97,000
	$57,000
	$55,000

Answer 1

Calcuiation of retained earnings of kamil company	$
Retained earnings at the beginning of the year	40,000
Net income for the year	25,000
Correction of previously over stated employee trained expenses	20,000
TOTAL	85,000
(Minus) Dividends	10,000
Retained earnings at the end of the year	75,000

Formula for ending retained earnings :

beginning retained earnings + Net income - Dividends

• Unrealized gain on availabble for sale securities $18,000 and

foreign currency transision adjestment $4,000 Will not take into retained earnings

So, the retained earnings at the end of the year is $ 75,000