During 2006, edgemont Corp had revenues of $230,000 and expenses, including income taxes, of $190,000. On December 31, 2005 Edgemont had assets of $350,000, liabilities of $80,000, and capital stock of $210,000. Edgemont paid a cash dividend of $25,000 in 2006. No additional stock was issued. Compute the retained earnings on Dec 31, 2005 & 2006

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Assets (350,000) = Liabilities (80,000) + capital stock (210,000) & retained earnings. but I'm not sure where to go from here

End of 2005/Start of 2006:
Assets = 350,000

Liabilities = 80,000
Shareholders Equity = 270,000 (350,000-80,000 because Assets = Liabilities + Equity)

To break down Shareholder's Equity further…. = Capital Stock + Retained Earnings
270,000 = 210,000 + Retained Earnings
Retained Earnings = 60,000

Events that occurred DURING 2006:
Revenues 230,000
Expenses and Tax 190,000
Net Income 40,000

Paid a cash dividend of 25,000
No addition stock was issued


What is the retained earnings?

For Dec. 31, 2005 it is $60,000 as calculated above.

For Dec. 31, 2006, it is as follows:

Retained Earnings, Jan 1, 2006 $60,000
Plus Net Income $40,000
Less: Dividend Paid $25,000
Retained Earnings, Dec. 31/06 $75,000

Therefore R/E for Dec. 31/05 is $60,000 and for Dec. 31/06 it is $75,000