This business/management problem is solved step by step below, with detailed explanations to help you understand the method and arrive at the correct answer.
ScanSolve AI Answer
Step 1: Identify the components of retained earnings calculation. The formula for closing retained earnings is: Closing Retained Earnings = Opening Retained Earnings + Net Profit for the year - Dividend paid - Profit transfer to sinking fund - Profit transfer to general reserve Step 2: Substitute the given values into the formula. • Opening Retained earnings: Rs. 20,000 • Net profit for the year: Rs. 40,000 • Dividend paid: Rs. 15,000 • Profit transfer to sinking fund: Rs. 6,000 • Profit transfer to general reserve: Rs. 14,000 Closing Retained Earnings = Rs. 20,000 + Rs. 40,000 - Rs. 15,000 - Rs. 6,000 - Rs. 14,000 Step 3: Perform the calculation. Closing Retained Earnings = Rs. 60,000 - Rs. 15,000 - Rs. 6,000 - Rs. 14,000 Closing Retained Earnings = Rs. 45,000 - Rs. 6,000 - Rs. 14,000 Closing Retained Earnings = Rs. 39,000 - Rs. 14,000 Closing Retained Earnings = Rs. 25,000 The closing retained earnings are: Rs. 25,000 3 done, 2 left today. You're making progress.