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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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Answer:

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

Answer:

A. 55,000

Explanation:

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