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28 February, 19:42

Grason Corporation is preparing a budgeted balance sheet for 2018. The retained earnings balance at December 31, 2017 was $533,500. The 2018 budgeted income statement shows expected net income of $112,000. The company expects to declare dividends during 2018 amounting to $40,000.

The expected balance in retained earnings on the 2018 budgeted balance sheet is:

A. $533,500

B. $685,500

C. $493,500

D. $605,500

E. $645,500.

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  1. 28 February, 21:02
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    D. $605,500

    Explanation:

    The computation of the expected balance in retained earnings on the 2018 is shown below:

    The ending balance of retained earning = Beginning balance of retained earnings + net income - dividend paid

    = $533,500 + $112,000 - $40,000

    = $605,500

    We simply applied the above formula so that the ending balance could arrive by considering all the items given in the question
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