On January 1, 2014, Aster Motors Inc.'s retained earnings were $57,000. During the year, it paid dividends of $32,000 and earned a net income of $30,000. What is the retained earning of Aster Inc. for the year that ended December 31, 2014? A. $55,000 B. $59,000 C. $112,000 D. $25,000

Question

Jenna Wells

Business

13 May, 14:14

On January 1, 2014, Aster Motors Inc.'s retained earnings were $57,000. During the year, it paid dividends of $32,000 and earned a net income of $30,000. What is the retained earning of Aster Inc. for the year that ended December 31, 2014? A. $55,000 B. $59,000 C. $112,000 D. $25,000

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Answers (1)

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Jamal Smith · Answer 1

A. $55,000

Explanation:

Retain earning in the end of the year is calculated by:

RE = BRE + NI (Loss) - PD

where:

RE = Retained earning in the end of period BRE = Beginning period of Retained earning NI = Net Income PD = Paid dividend (including Cash dividend and Stock dividend)

Thus:

RE = 57,000 + 30,000-32,000 = $55,000