Please computate retained earnings?

Question

During 2009, Edgemont Corporation had revenues of $230,000 and expenses, including income taxes, of $190,000. On December 31, 2008, Edgemont had assets of $350,000, liabilities of $80,000, and capital stock of $210,000. Edgemont paid a cash dividend of

$25,000 in 2009. No additional stock was issued. Compute the retained earnings on December 31, 2008, and 2009

Answer 1

December 31, 2008

Assets = Liabilities + Stockholders' Equity (i.e. Capital stock + RE)

$350,000 = $80,000 + $210,000 + RE

so RE = $60,000

December 31, 2009

Opening RE $60,000

+ Net income $40,000

- Dividend $25,000

= Ending RE $75,000