If retained earning is used for reinvestment, what will be the journal entry and its effect on balance sheet?
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Retained earnings are the portion of a company's net income that management retains for internal operations instead of paying it to shareholders in the form of dividends. In short, retained earnings is the cumulative total of earnings that have yet to be paid to shareholders. These funds are also held in reserve to reinvest back into the company through purchases of fixed assets or to pay down debt.
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