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    tburick34's Avatar
    tburick34 Posts: 2, Reputation: 1
    New Member
     
    #1

    Jun 4, 2007, 01:05 PM
    Calculating Retained Earnings
    I am having an issue with this question.

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

    I was able to figure out the 2005 RE
    210,000+80,000= 290,000
    350,000-290,000= 60,000
    2005 Retained Earnings = 60,000

    I am having difficulty now with the 2006 RE. Can anyone explain to me??

    Thanks in advance
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #2

    Jun 10, 2007, 08:53 AM
    2005 RE 60,000
    Plus Net Income of 40,000
    Less Dividends Paid 25,000
    2006 RE = 75,000

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