Question

January 1, 2017, Assembly System Corporation's Retained Earnings account had a balance of $675,000. During 2017,...

January 1, 2017, Assembly System Corporation's Retained Earnings account had a balance of $675,000. During 2017, cash dividends of $25,000 and stock dividends with a market value of $55,000 were declared and distributed. Assembly System Corporation had a net loss of $5,000 in 2017. What is the balance in Retained Earnings that would appear on Assembly System Corporation's statement of shareholders' equity on December 31, 2017

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Answer #1

Calculation of Closing Balance of Retained Earning

Retained Earning Balance on January 1, 2017          $675,000
Less: Net Loss ($5,000)
$6,70,000
Less: Cash Dividends $25,000
          Stock Dividends $55,000
($80,000)
Retained Earning Balance, December 31 $5,90,000

Hence Retained Earnings that would appear on Assembly System Corporation's
statement of shareholders' equity on December 31, 2017 is $5,90,000

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