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Warren Enterprises had the following events during Year 1: The business issued $25,000 of common stock to its stockholders. The business purchased land for $17,000 cash. Services were provided to customers for $21,000 cash. Services were provided to customers for $10,000 on account. The company borrowed $21,000 from the bank. Operating expenses of $17,000 were incurred and paid in cash. Salary expense of $1,300 was accrued. A dividend of $9,000 was paid to the stockholders of Warren Enterprises. Assuming the company began operations during Year 1, What is the amount of retained earnings as of December 31, Year 1

Respuesta :

The amount of retained earnings as of December 31 is, 2500.

Cash revenue 21,000.

Credit revenue 10,000.

Total revenue 31,000.

Cash operating expenses 17,000 .

Accrued expenses 1,300 .

Total expenses (18,300).

Net income 11,500.

Net income - Dividends = Retained Earnings.

= 11,500 - 9000

Retained Earnings = 2500.

What is retained earnings ?

  • The amount of profit a business keeps after paying all of its direct and indirect expenses, income taxes, and dividends to shareholders is known as retained profits.
  • This is the percentage of the company's equity that may be utilized, for example, to fund the purchase of new machinery, research and development, and marketing.

What is retained earning with example?

  • 22 October 2020 The total profits left over after a corporation pays dividends to its shareholders are known as retained earnings.
  • These funds might be put back into the company by, say, buying new machinery or paying off debt.

How do I calculate retained earnings?

  • In order to compute retained earnings, first discover the common stock line item on your balance sheet.
  • Then, take the total stockholder equity and remove the amount for the common stock line item (if the only two items in your stockholder equity are common).

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