Computation of Ending Retained Earnings (Note all items should be included in the computation)
Capital stock $60,000 Inventory 100,000
Long-term loan payable $18,000 Cash 12,000
Dividends 3,000 Net Income (loss) 5,000
Retained Earning 50,000 Machinery 175,000

Only two things affect retained earnings: net income adds to it (or loss subtracts from it), and dividends subtract from it because they're paid out of the retained earnings.

Retained earnings is exactly what it says it is: the earnings which are retained by the company (i.e. not paid out in dividends).

morgaine300 I think I need your help with bookkeeping online course final project from Penn Foster College.
So far it's been failed 3 times.
Does this site have PM?

Yes, we have PM but questions are supposed to be posted on the public forums where everyone can see them. Unless something gets of a private nature (for instance, if you had to give me confidential company info), then it's supposed to remain public.

(Your PM doesn't show up yet cause you have too little posts.)