The dayton corporation began the current year with a retained earnings balance of $32,000. during the year, the company corrected an error made in the prior year, which was a failure to record depreciation expense of $3,000 on equipment. also, during the current year, the company earned net income of $12,000 and declared cash dividends of $7,000. compute the year-end retained earnings balance.

To calculate retained earnings: Net income - dividends paid to shareholders. Step 1: Begin with the net income of $12,000 and subtract dividends paid of $7,000. Net income $12,000 - $7,000 dividends = $5,000 Step 2: Add retained earnings balance and $5,000 (net income from step 1) $32,000 + $5,000 = $38,000 Step 3: Subtract depreciation from balance in Step 2 $38,000 - depreciation $3,000= $35,000