A company began the year with retained earnings of $1,000. Net income for the year was $250, it repaid $350 of its line of credit balance, and it paid dividends to its shareholders of $200. What was the company’s retained earnings at the end of the year?
Beginnig of year of Retained Earning+net incoke for the year-dividends-repaid
To find the company's retained earnings at the end of the year, we need to consider the various transactions that affected retained earnings.
Retained Earnings at the Beginning of the Year = $1,000
Net Income for the Year = $250
Repayment of Line of Credit Balance = -$350
Dividends Paid to Shareholders = -$200
To calculate the retained earnings at the end of the year, we need to update the retained earnings using the following formula:
Retained Earnings at the End of the Year = Retained Earnings at the Beginning of the Year + Net Income - Dividends
Retained Earnings at the End of the Year = $1,000 + $250 - $200
Retained Earnings at the End of the Year = $1,050
Therefore, the company's retained earnings at the end of the year is $1,050.