At the beginning of the year,Sigma Company's balance sheet reported Total Assets of $195,000; Total Liabilities of $15,000; and Total Paid-in capital of $60,000.During the year,the company reported total revenues of $226,000 and expenses of $175,000.Also,dividends during the year totaled $48,000.Assuming no other changes to Retained earnings,the balance in the Retained earnings account at the end of the year would be:

A) $174,000.
B) $78,000.
C) $171,000.
D) $120,000.
E) $123,000.

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Megan Sullivan · Accepted Answer

Final Answer : E, Explanation :  The beginning Retained Earnings can be calculated by subtracting Total Liabilities and Total Paid-in Capital from Total Assets: $195,000 - $15,000 - $60,000 = $120,000. The net income for the year is Revenues minus Expenses: $226,000 - $175,000 = $51,000. The ending Retained Earnings is the beginning Retained Earnings plus Net Income minus Dividends: $120,000 + $51,000 - $48,000 = $123,000.

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