On January 1, 2012, Money Company's balance in retained earnings was $10,000,000. At the end of the year, December 31, 2012, the balance in retained earnings was $9,400,000. During 2012, the company earned net income of $440,000. How much were dividends?

Question

Quizplus · Accepted Answer

The decrease in retained earnings is $600,000 ($10,000,000 - $9,400,000). Since the company earned $440,000 in net income, dividends must have been $1,040,000 ($600,000 decrease + $440,000 net income).

On January 1, 2012, Money Company's Balance in Retained Earnings