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Tuscan incorporated had a retained earnings balance of $60,000 at December 31 of the prior year. In the current year, Tuscan reported the following results. • Reported net income of $100,000. • Cash dividends of $33,000 declared and paid. • Tuscan discovered this year that it made a math error three years ago to correct for this. $12,000 (net of tax) must be added to the current year's beginning retained earnings balance. • Revised an estimate of a machine's salvage value. Depreciation increased by $1.000 per year. Calculate the retained earnings balance at December 31 of the current year. (Amounts to be deducted should be indicated with a minus sign.)

Answer :

$139,000 is retained earnings balance at December 31 of the current year.

Calculating the problem:

The computation of the retained earnings balance at December 31, 2019 is below:

= Beginning retained earning balance + depreciation charged yearly + net income - cash dividend paid

= $60,000 + $12,000 + $100,000 - $33,000

= $139,000

The depreciation in yearly is

= $1,000 × 12 months

= $12,000

Retained earnings:

Retained earnings is the amount of profit left by a company after paying all direct costs, indirect costs, income taxes, and dividends to shareholders. It represents, for example, a portion of the company's equity that can be used to invest in new equipment, research and development, and marketing.

A company's retained earnings is the company's cumulative net income retained by the company at a particular point in time, such as at the end of the reporting period.

How is retained earnings calculated?

Retained Earnings is calculated by adding (or subtracting) net income from the previous period's retained earnings and subtracting net dividends paid to shareholders.

Learn more about retained earnings:

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