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1 October, 12:59

Crawford Company started the year with $60,000 in its Common Stock account and a credit balance in Retained Earnings of $44,000. During the year, the company earned net income of $48,000 and declared and paid $20,000 of dividends. In addition, the company sold additional common stock amounting to $28,000. As a result, the amount of its retained earnings at the end of the year would be

a. $160,000

b. $72,000

c. $132,000

d. $100,00

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  1. 1 October, 13:07
    0
    b. $72,000

    Explanation:

    Retained EarningEnding Balance = Opening Balance of retained earning + net income - Dividend Declared

    Retained EarningEnding Balance = $44,000 + $48,000 - $20,000

    Retained EarningEnding Balance = $44,000 + $48,000 - $20,000

    Retained EarningEnding Balance = $72,000

    The issue of common stock will not effect retained earning account balance It will be credited to common stock account and add-in-capital common stock account.
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