Information related to Lamar Co. for the years ending December 31, 2017 and 2016 follows:
$\begin{array}{lrr}
&12-31-17&12-31-16\
\text { Common stock } & \$ 120,000 & \$ 80,000 \
\text { Retaine dearnings at vear end (after closing) } & 100,000 & 70,000
\end{array}$

Dividends declared for 2017 totaled $20,000. How much was generated through operations?

Question

Information related to Lamar Co. for the years ending December 31, 2017 and 2016 follows:
$\begin{array}{lrr}
&12-31-17&12-31-16\
\text { Common stock } & \$ 120,000 & \$ 80,000 \
\text { Retaine dearnings at vear end (after closing) } & 100,000 & 70,000
\end{array}$

Dividends declared for 2017 totaled $20,000. How much was generated through operations?

Quizplus · Accepted Answer

To calculate the amount generated through operations, we need to look at the net income figure. We can see that the net income for 2017 is $50,000. Dividends declared are not included in net income, so we need to add them back. Therefore, the amount generated through operations is $70,000 ($50,000 + $20,000). The correct answer is B.

Information Related to Lamar Co Dividends Declared for 2017 Totaled $20,000