Grason Corporation is preparing a budgeted balance sheet for 2018. The retained earnings balance at December 31, 2017 was $533,500. The 2018 budgeted income statement shows expected net income of $112,000. The company expects to declare dividends during 2018 amounting to $40,000.

The expected balance in retained earnings on the 2018 budgeted balance sheet is:

A. $533,500

B. $685,500

C. $493,500

D. $605,500

E. $645,500.

Question

Mara Freeman

Business

15 September, 13:29

Grason Corporation is preparing a budgeted balance sheet for 2018. The retained earnings balance at December 31, 2017 was $533,500. The 2018 budgeted income statement shows expected net income of $112,000. The company expects to declare dividends during 2018 amounting to $40,000.

The expected balance in retained earnings on the 2018 budgeted balance sheet is:

A. $533,500

B. $685,500

C. $493,500

D. $605,500

E. $645,500.

+5

Answers (1)

Know the Answer?

Lailah Garrison · Answer 1

D. $605,500

Explanation:

The computation of the expected balance in retained earnings on the 2018 is shown below:

The ending balance of retained earning = Beginning balance of retained earnings + net income - dividend paid

= $533,500 + $112,000 - $40,000

= $605,500

We simply applied the above formula so that the ending balance could arrive by considering all the items given in the question