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7 June, 08:48

Jackson Corp. has beginning retained earnings of $400. During the year Jackson had $800 of revenues and $200 in expenses. Jackson paid a dividend of $100. What is retained earnings at year-end?

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  1. 7 June, 11:41
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    The retained earnings for the end of the year is $900

    Explanation:

    Retained earning is calculated as

    Beginning retained earnings + Net income - cash dividend

    in the questions we were given the beginning retained earning (BRE) as $400 and Cash dividend as $100. However we were not given the actual Net income but we can derive the net income by deducting the expenses from the total revenue.

    solution

    Net income = revenue - expenses = $800 - $200 = $600

    Now we can calculate our Retained earnings by adding

    Beginning retained earning $400

    Net income $ 600

    and deducting the cash dividend $100

    $400 + $600 - $100 = $900
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