Beta Company was founded in 2014.Its yearly earnings and dividend payments are shown here: 2012: Net income $ \$ 4,000 $, paid zero dividends
2013: Net income $ \$ 20,000 $, paid $ \$ 10,000 $ dividends
2014: Net income of $ \$ 8,000 $, paid $ \$ 5,000 $ dividends
2015: Net loss of $ \$ 22,000 $, paid zero dividends At the end of 2015,which of the following statements would be accurate?

Question

Quizplus · Accepted Answer

Beta Company has a retained earnings deficit because the total net income from 2014 and 2013 ($8,000 + $20,000 = $28,000) minus the total dividends paid in those years ($5,000 + $10,000 = $15,000) still results in a positive retained earnings of $13,000 before 2015. However, the net loss of $22,000 in 2015 would reduce the retained earnings to a negative amount ($13,000 - $22,000 = -$9,000), indicating a retained earnings deficit. The information for 2012 is not relevant since the company was founded in 2014.

Beta Company Was Founded in 2014 $4,000 \$ 4,000 $4,000 , Paid Zero Dividends 2013: Net Income

Beta Company Was Founded in 2014 $\$ 4,000$ , Paid Zero Dividends
2013: Net Income