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New Member
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Oct 16, 2007, 04:34 PM
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Calculate retained earnings
Using the data below, how do I calculate the retained earnings balance as of December 31,2007
Retained earning dec 31 2008 - $245,200
Net decrease in total assets during '08 - $37,400
Net increase in accounts receivable in '08 - $8,600
Dividends declared and paid in '08 - $33,600
Proceeds from issuance of bonds during '08 - $88,400
Net loss for the year ended Dec 31, 2008 - $23,000
Thanks
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New Member
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Oct 17, 2007, 01:16 PM
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I am not sure if I am doing this correctly. I think the answer I wrote below couldbe right and I added them altogether as we are trying to find out the balance as of 2007 would be 1 year in the past. Could you check my answer, and if I am wrong, possibly point me in the right direction?
245,200+23,000+33,600 = Retained Earnings as Dec 31 2007
Retained Earnings = 301,800
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Junior Member
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Oct 18, 2007, 06:01 AM
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A loss would be a reduction in retained earnings, not an addition.
Similarly, dividends reduce equity, they do not increase equity
Herman
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New Member
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Oct 19, 2007, 10:23 AM
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The answer you have from aahuja1 is correct.
Retained Earnings is affected by the following transactions:
Retained Earnings Beginning of the Period
Less (Plus) previous period accounting errors (Retrospective Approach)
Less (Plus) Changes in accounting principles (retrospective Approach)
Less: Dividends Declared
Plus: Net Income for the period
Less: Loss for the period
Plus: Quasi Reorganizations
retained Earnings at the End of the Period
In this case you have:
begging Balance - ? 301,800 Plug In
Less: Declared Dividends - 33,600
Less: Loss for the period - 23,000
Ending balance - 245,200
Therefore, 245,200 + 33600 + 23000 = 301,800
Plug the number in in the above chart and you will see that you get to the ending balance for 2008.
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New Member
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Oct 20, 2007, 09:36 AM
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Hi,
SO, in applying to another "balance sheet"... if I have a retaining at the end of the year as $57,605 with Net Income of $31,386 and a Common Dividends Paid of $12,554. I should do the math reversely to find out the Balance of the Retain Earning at the beginning of the year.
$57,605 - $31,386 + $12,554 = $38,773
Right?
Thanks
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New Member
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Oct 20, 2007, 02:40 PM
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Yes, that is correct.
Hope you have it this time
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