Atlantic Corporation reported the following amounts at the end of the first year of operations: contributed capital $100,000; sales revenue $400,000; total assets $300,000; $20,000 dividends; and total liabilities $160,000. Retained earnings and total expenses would be: A) retained earnings $40,000 and expenses $340,000.B) retained earnings $60,000 and expenses $320,000.C) retained earnings $140,000 and expenses $240,000.D) retained earnings $160,000 and expenses $220,000.

A) retained earnings $40,000 and expenses $340,000.

Explanation:

Total Assets = Total Equity + Total Liabilities

$300,000 = Total Equity + $160,000

Total Equity = $300,000 - $160,000

Total Equity = $140,000

Now

Total Equity = Contributed Capital + Retained Earning

$140,000 = 100,000 + Retained Earning

Retained Earning = $140,000 - $100,000 = $40,000

Now

Retained Earning = Revenue - Expenses - Dividend paid

$40,0000 = $400,000 - Expenses - $20,000

$40,0000 = $380,000 - Expenses

Expenses = $380,000 - $40,000

Expenses = $340,000

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