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-   -   How to find retained earinings only knowing net income (https://www.askmehelpdesk.com/showthread.php?t=801009)

  • Sep 10, 2014, 12:41 PM
    scabslb
    How to find retained earinings only knowing net income
    Landon Corporation was organized on January 2, 2012, with the investment of $100,000 by each of its two stockholders. Net income for its first year of business was $85,200. Net income increased during 2013 to $125,320 and to $145,480 during 2014. Landon paid $20,000 in dividends to each of the two stockholders in each of the three years. What are the retained earnings for Jan 1st 2014 and Dec 31st 2014?
  • Sep 10, 2014, 01:08 PM
    pready
    First find retained earnings for Jan 1 2013, so start with your investment on Jan 2 2012 plus net income for the first year(2012) minus dividends for the first of three years equals Jan 1 2013 retained earnings.

    Now start with Jan 1 2013 retained earnings plus net income during 2013 minus dividends for the second year of three years equals Jan 1 2014 retained earnings.

    Finally start with Jan 1 2014 retained earnings plus net income during 2014 minus dividends for the third year of three years equals Dec 31 2014 and Jan 1 2015 retained earnings.

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