Skysong, Inc. began the year with retained earnings of $308000. During the year, the company issued...

Skysong, Inc. began the year with retained earnings of $308000. During the year, the company issued $417000 of common stock, recorded expenses of $1193000, and paid dividends of $80400. If Skysong ending retained earnings was $328000, what was the company’s revenue for the year? $1293400 $1213000 $1630000 $1710400

Expert Solution

Retained Earning at Beginning of the year is $308,000

Retained Earning at End of the year is $328000

Retained Earnings at end represents closing balance after payment of divided of $ 80400

Assuming that if dividend is not paid there would be closing balance retained earnings is =$328000+$80400=$ 408400

Compare the above closing balance with opening balance of retained earnings =$408400 -$308000= $100 400

$100,400 is Profit made during the period

Revenue = Profit During the period + Expenses incurred =$1004000 + $1193000 = $12,93,400

Alternatively

Generally Dividends are paid out of opening reserves balance

so dividend is paid out of opening retained earnings = $308000- $ 80400= $227600

Compare the above retained earnings with closing balance of retained earning = $328000 - $227600 = $100 400

Revenue = Profit During the period + Expenses incurred =$1004000 + $1193000 = $12,93,400

Therefore from the options FIRST OPTION is correct

Thanks

ekkarill92 answered 9 months ago

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