Answer:
a. $45,000
Explanation:
The retained earnings of the Company X at the beginning of the year shall be determined using the following mentioned formula:
Retained Earnings at the end of year=Retained Earnings at the start of the year+net income for the year-dividend paid by company X
In the given question:
Retained Earnings at the end of year=$60,000
Retained Earnings at the start of the year=?
Net income for the year=$25,000
Dividends paid by Company X=$10,000
$60,000=Retained Earnings at the start of the year+$25,000-$10,000
Retained Earnings at the start of the year=$60,000-$25,000+$10,000
=$45,000
So based on the above calculation, the answer is a. $45,000
