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The records of Groot Corp. for calendar 2020 reflected the following correct pre-tax amounts: Gain from discontinued operations, $50,000; Cash dividends declared and paid, $45,000; Retained earnings, January 1, 2020, $275,000, Correction of accounting error, $35,000 debit; Income before income taxes and before discontinued operations, $165,000. The average income tax rate of 40% applies to all items except the dividends. Required Calculate the December 31, 2020 ending balance of retained earnings.

The records of Groot Corp. for calendar 2020 reflected the following correct pre-tax amounts: Gain from discontinued operations, $50,000; Cash dividends declared and paid, $45,000; Retained earnings, January 1, 2020, $275,000, Correction of accounting error, $35,000 debit; Income before income taxes and before discontinued operations, $165,000. The average income tax rate of 40% applies to all items except the dividends. Required Calculate the December 31, 2020 ending balance of retained earnings.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The records of Groot Corp. for calendar 2020 reflected the following correct pre-tax amounts:

  • Gain from discontinued operations, $50,000;
  • Cash dividends declared and paid, $45,000;
  • Retained earnings, January 1, 2020, $275,000,
  • Correction of accounting error, $35,000 debit;
  • Income before income taxes and before discontinued operations, $165,000.

The average income tax rate of 40% applies to all items except the dividends.

Required

Calculate the December 31, 2020 ending balance of retained earnings.

 

 

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