Retained Earnings Equation – Formula – Example - Format
Retained Earnings represent that Portion of Profits that are retained by the business generated through profitable operations. These are utilized to pay Dividend and for other business purposes like for profitable business operations of the business or paying off debts and especially in case of Crisis or Depression period of Economy. Retained Earnings Equation / Retained Earnings Formula Opening Retained Earnings + Net Income for the year – Dividend = Closing Retained Earnings / Retained Loss Example: For Example, ABC Company has the following for the Accounting Period 2016: Opening Retained Earnings From the previous accounting period = 4200000, Profit for the Current Accounting Period = 1000000, Dividend Declared to Shareholder = 500000, then the Closing Retained Earnings can be calculated by using above Equation or Formula. 4200000 + 1000000 – 500000 = 4700000 Format ABC Statement of Retained Earnings For ...