Denmark Inc

question 100

Multiple Choice

Denmark Inc. is preparing a statement of stockholders' equity for 2014. On January 1, 2014, Denmark started the year with a $100,000 credit balance in its retained earnings account. During 2014, the company earned net income of $70,000 and declared dividends of $10,000. Also, the company received cash of $15,000 as an additional investment by its owners. What is the balance in retained earnings on December 31, 2014?

• A) $100,000.
• B) $170,000.
• C)$175,000.
• D)$160,000.

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Definitions:

Fair Value Approach

An accounting method that measures assets and liabilities at estimates of their current market value rather than historical cost.

Quoted Prices

The prices of securities that are publicly listed and available for investors to buy and sell.

Active Markets

Markets where transactions for assets or liabilities occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 1 Input

denotes the highest-quality and most transparent valuation inputs for financial reporting, such as quoted prices in active markets for identical assets or liabilities.