On January 1, 2014, Miller Corporation had retained earnings of $8,000,000. During 2014, Miller reported net income of $1,500,000, declared dividends of $500,000, and issued common stock for $1,000,000. What were Miller's retained earnings on December 31, 2014?

Question

Quizplus · Accepted Answer

Retained earnings at the end of the year can be calculated by adding net income to beginning retained earnings, and then subtracting dividends. 
Beginning retained earnings = $8,000,000
Net income = $1,500,000
Dividends = $500,000
Therefore, Retained Earnings on December 31, 2014 is:
= $8,000,000 + $1,500,000 - $500,000
= $9,000,000

On January 1, 2014, Miller Corporation Had Retained Earnings of $8,000,000