I’m sure this is a dumb question but can someone explain to me what beginning contributed capital is? I selected C which is wrong because I thought it was beginning retained earnings. Any help will be much appreciated. Total equity of JME Company at the beginning of the 2004 period amounted to $1,000. During 2004 the company reported net income of $800 and paid a $200 distribution. If retained earnings at the end of 2004 are $900, what was beginning contributed capital? A) $100. B) $700. C) $300. D) $400.
Is it B) $700 ?
Initially Retained Earnings + Common Equity = 1000 Finally Retained Earnings = 900 = Initial Re + 600 (for 2004) => Initial Re= 300 If beginning of year Re = 300, and Initial Re + Beginning Comon Equity = 1000 Then Beginning Common EQ = 700. Thats money initaly contributed
Yes Nann, B is correct. Thanks Mosi! That makes sense.