How To Find Retained Earnings If Not Given

There are two possible answers to this particular question:

Answer 1: If Closing Retained Earnings Not Given On Balance Sheet 

As we know that Assets = Liabilities + Owner’s Equity according to Accounting Equation, so by subtracting the Liabilities from Assets, we get Owner’s Equity as shown below:

(In case of Company) Equity = Assets - Liabilities

If you know about, “Statement of Changes In Equity”, then you can easily calculate Closing Retained Earnings if not given on the Balance Sheet / Statement of Financial Position. 

We need to the fill the information and we get retained earnings and most of times we need to subtract Common Stocks, Share Capital, Share Premium Net Income / Profits and adding back Dividends, Capital Reserves and Net Loss in order to get the value of Retained Earnings. 

  

Answer 2: If Beginning Retained Earnings Not Given 

  

After finding out Closing Retained Earnings, you can easily calculate Opening Retained Earnings.

So, it is the easy method to get the value of Beginning Retained Earnings if not given in the Previous Year Balance Sheet.

If you know the Statement of Retained Earnings, then you can find Opening Retained Earnings easily. Retained Earnings Formula is given as:  

Opening Retained Earnings + Net Income for the year – Dividend = Closing Retained Earnings / Retained Loss 

Putting the value of given information in the above formula, you can easily calculate the value of Opening Retained Earnings. 

  

So, these are the two possible answers to this question. All you need is to fill the given information in the formula and find the missing figure.