Answer:
$20,000
Explanation:
Calculation for the amount of retained earnings as of December 31, Year 2.
Using this formula
Retained earnings=Total cash -Notes payable-common stock
Where,
Total cash= $195,000
Notes payable= $90,500
Common stock= $84,500
Let plug in the formula
Retained earnings = $195,000 − $90,500 − $84,500
Retained earnings= $20,000
Therefore the amount of retained earnings as of December 31, Year 2 will be $20,000