[Solved] Example Retained Earnings in Balance Sheet

Welcome back to our blog, today we are going to show the retained earnings in the balance sheet, as we already showed the retained earnings journal entry in our previous post.

If you guys know how to make a retained earnings journal entry then you can check this example.

What Are Retained Earnings on a Balance Sheet

Before we go to the example let me tell you how Retained Earnings work on Balance Sheet.

Now let's start Have you ever wondered where a company's profits disappear after the final net income number on the income statement? Well, some are sprinkled on shareholders like fairy dust which is famously known as (dividends!), but the rest? Ah, this is where Retained Earnings steps in, like the financial Robin Hood, and snatches away profits to boost the company's future.

retained earnings in the balance sheet

Now see our given example where we show the retained earnings on the balance sheet:

Items	Amount
Assets
Current Assets
Cash and Equivalents	10,000
Accounts Receivable	5,000
Inventory	3,000
Non-Current Assets
Property, Plant & Equipment	20,000
Total Assets	38,000
Liabilities & Shareholders' Equity
Liabilities
Current Liabilities
Accounts Payable	6,000
Short-Term Debt	4,000
Non-Current Liabilities
Long-Term Debt	8,000
Total Liabilities	18,000
Shareholders' Equity
Common Stock	10,000
Retained Earnings	10,000
Total Shareholders' Equity	20,000
Total Liabilities & Shareholders' Equity	38,000

Now let's find Retained Earnings:

• Beginning Balance (Dec 31, 2022): Assume 5,000 (or any other starting point).

• Net Income for 2023: 8,000 (assuming profit).

• Dividends Paid in 2023: 3,000 (optional, not all companies pay dividends).

retained earnings formula

• Retained Earnings (Dec 31, 2023) = Beginning Balance + Net Income - Dividends Paid.

• 10,000 = 5,000 + 8,000 - 3,000.

Conclsuion

here in this post, we add an example of retained earnings in the balance sheet and also teach how to find retained earnings with the formula so if you are accounting student then you should read this spot till the end.