Kramer Co. had retained earnings of $30000 on the balance sheet but disclosed in the footnotes that $6000 of retained earnings was restricted for building expansion and $2000 was restricted for bond repayments. Cash of $4000 had been set aside for the plant expansion. How much of retained earnings is available for dividends?

Question

Quizplus · Accepted Answer

The retained earnings available for dividends are calculated by subtracting the total restricted amounts from the total retained earnings. Here, $6000 + $2000 = $8000 is restricted, so $30000 - $8000 = $22000 is available for dividends.

Kramer Co Had Retained Earnings of $30000 on the Balance Sheet