How to Calculate Retained Earnings?
The formula is A = L + SE. "A" equals assets, "L" equals liabilities, "SE" equals capital stock. So your company has $500,000 in assets, $1,000 in liabilities, and $150, 000 in capital stock you would have 500,000 = 1,000+150,000 your Retained Earnings would be $349,000.
Retained earnings refers to money a company has earned and not used for paying expenses or dividends. When finalizing your balance sheet, you need to know how to calculate the company's new retained earnings. Before you do so, you need to know the retained earnings from the previous year, the company's net income and the amount of money the company paid in dividends.
The retained earnings plus the common stock value equal the shareholders' equity in the company.
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