[khadija2782]

During 2006, Edgemont corporation had revenues of $230,000 and expenses, including income taxes of $ 190,000. On December 31, 2005, Edgemont had assests of $350,000, liabilities of $80,000, and a capitol stock of $210,000. Edgemont paid cash dividend of $25,000 in 2006. No additional stock was issued. Compare the retained earnings on DEC 31, 2005 and 2006

[santys72]

For 2005:
Assets - Liabilities = Stockholders equity
350,000 - 80000 $270,000
Stockholders equity = $270,000
Less: Capital Stock - $210,000
Retained Earnings - $60,000 - 2005

For 2006
Net Income for 2006 - 230,000 - 190,000 = $40,000
Retained Earnings - 2005: $60,000
Plus: Net Income 2006 - $40,000
Less Dividends 2006 - $25,000
Retained Earnings 2006= $75,000

Therefore,
RE 2005 - $60,000
RE 2006 - $75,000