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29 April, 17:42

Cullumber Construction Company earned $400,000 during the year ended June 30, 2017. After paying out $225,794 in dividends, the balance went into retained earnings. If the firm's total retained earnings were $841,936 at the end of fiscal year 2017, what were the retained earnings on its balance sheet on July 1, 2016

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  1. 29 April, 18:48
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    Opening balance of retained earnings is $667,730

    Explanation:

    The balance of retained earnings at the the end is the sum of opening balance, profit earned and less dividend payment for the period

    Retained earnings at the end = Opening balance + profit - dividend

    let y represent the opening balance

    841, 936 = y + 400,000 - 225,794

    y = 841, 936-400,000 + 225,794

    y = $667,730

    Opening balance of retained earnings = balance sheet on July 1, 2016 is $667, 730
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