TriCycle, Corp. began the year 2018 with $25 million in retained earnings. The firm earned net income of $7 million in 2018 and paid $1 million to its preferred stockholders and $3 million to its common stockholders. What is the year-end 2018 balance in retained earnings for TriCycle?
A) $25 million
B) $28 million
C) $32 million
D) $36 million

Question

Quizplus · Accepted Answer

The year-end 2018 balance in retained earnings is calculated as the beginning balance plus net income minus dividends paid. Here, it's $25 million + $7 million - $1 million - $3 million = $28 million.