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    zacbulger's Avatar
    zacbulger Posts: 1, Reputation: 1
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    #1

    Jul 8, 2009, 07:25 PM
    What is the retained earnings for this
    Here is the question:

    Using the retained earnings equation and an opening balance of $0, compute the amount of net Income for the year ended

    What would be the answer?


    Assets
    Cash 74,400.00
    Account Receivable 0
    Property and Equipment 48,000.00

    Total Assets 122,400.00


    Liabilities
    Account Payable 8,000.00
    Note Payable 2,850.00
    Total Liabilities 10,850.00
    Stockholders Equity
    Contributed Capital 98,000.00
    Retained Earnings 13,550.00
    Total Stockholders Equity 111,550.00
    Total Liabilities and
    Stockholders Equity 122,400.00

    Thank you for your Help!!
    lost??'s Avatar
    lost?? Posts: 234, Reputation: 7
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    #2

    Jul 8, 2009, 08:08 PM
    Each year when net income (loss) is calculated, it is closed out to the retained earnings account. If the company has net income, it increases retained earnings, if it has a net loss, it reduces retained earnings. If retained earnings has an opening balance of $0 and a closing balance of $13,550, then net income from the year is $13,550.
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #3

    Jul 8, 2009, 11:48 PM

    Both of you please read our guidelines for posting homework problems to this site:
    Ask Me Help Desk - Announcements in Forum : Homework Help

    Lost, we are not here to just answer people's homework for them.

    And did this company have no dividends? Because if not, there's absolutely nothing to "calculate" anyway.
    lost??'s Avatar
    lost?? Posts: 234, Reputation: 7
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    #4

    Jul 9, 2009, 01:38 PM
    Apologies... and I did not consider dividends because he did not mention them.
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #5

    Jul 9, 2009, 07:07 PM

    Yeah, I know dividends weren't mentioned, and that may mean there weren't any... but people paraphrase and leave info out all the time, so I never quite trust it when something I'd consider "normal" is missing.
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