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What is the amount of retained earnings at December 31, 2019?

Obrien Industries began 2019 with retained earnings balance of $735,000. During 2019, the firm earned $280,000 after taxes. From this amount, preferred stock holders were paid $42,000 in dividends and common stock dividends were $175,000.   

What is the amount of retained earnings at December 31, 2019?

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Expert Solution

The amount of retained earnings at December 31, 2019 is computed by using the below formula:

Ending Retained Earnings = Beginning Retained Earnings + Net Income - Preference Shareholders Dividend - Common Stock Dividends

Beginning Retained Earnings = $ 735,000

Net Income = $ 280,000

Preference Shareholders Dividend = $ 42,000

Common Stock Dividends = $ 175,000

By feeding these values in the above mentioned formula we shall get:

= $ 735,000 + $ 280,000 - $ 42,000 - $ 175,000

= $ 798,000

So the amount of retained earnings at December 31, 2019 is $ 798,000.

jeff jeffy answered 2 years ago
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