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:

Current Assets
Cash and Equivalents10,000
Accounts Receivable5,000
Non-Current Assets
Property, Plant & Equipment20,000
Total Assets38,000
Liabilities & Shareholders' Equity
Current Liabilities
Accounts Payable6,000
Short-Term Debt4,000
Non-Current Liabilities
Long-Term Debt8,000
Total Liabilities18,000
Shareholders' Equity
Common Stock10,000
Retained Earnings10,000
Total Shareholders' Equity20,000
Total Liabilities & Shareholders' Equity38,000

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.


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.