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Panhandle Corporation was organized on January 3, 2012. The firm was authorized to issue 100,000 shares of $5 par value common stock. During 2012, Panhandle had the following transactions relating to shareholders’ equity:
Issued 30,000 shares of common stock at $7 per share.
Issued 20,000 shares of common stock at $8 per share.
Reported a net income of $100,000.
Paid dividends of $50,000.
What is retained earnings at the end of 2012?
Expert Answer
Solution:
| calculation of retained earning balance at the end of 2012 | |
| Beginning balance | – |
| add : net income for the year | 100,000 |
| Less : Dividend | – 50,000 |
| retained earning balance at the end of 2012 | 50,000 |
