Amerchandiser uses a perpetual inventory system. the beginning retained earnings balance of the merchandiser was $110,000. during the year, sales revenue amounted to $90,000, cost of goods sold was $40,000, and all other expenses totaled $12,000. the company declared and paid $27,000 as dividends. the ending balance of retained earnings would be

$121,000

Explanation:

The computation of the ending retained earning balance is shown below:

The ending balance of retained earning = Beginning balance of retained earnings + net income - dividend paid

where,

Beginning balance of retained earnings is $110,000

The dividend paid is $27,000

And, the net income is

= Sales revenue - cost of goods sold - all other expenses

= $90,000 - $40,000 - $12,000

= $38,000

So, the ending balance of retained earnings is

= $110,000 + $38,000 - $27,000

= $121,000

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