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20 May, 04:38

Paulson Company began the year with retained earnings of $500,000. During the year, the company issued $720,000 of common stock, recorded expenses of $2,000,000, and paid dividends of $80,000. If Paulson's ending retained earnings was $520,000, what was the company's revenue for the year?

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  1. 20 May, 05:06
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    Revenue for the period = $2,100,000

    Explanation:

    Provided information,

    Opening balance of retained earnings = $500,000

    Expenses recorded for the period = $2,000,000

    Dividends paid during the period = $80,000

    Closing balance of retained earnings = $520,000

    Therefore increase in retained earnings = $520,000 - $500,000 = $20,000

    Earnings for the period - Expenses for the period - Dividend for the period = $20,000

    Now, putting values in above,

    Earnings - $2,000,000 - $80,000 = $20,000

    Earnings = $20,000 + $80,000 + $2,000,000 = $2,100,000

    Revenue for the period = $2,100,000
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