The following information is provided by the Ferrara Corporation: $$\begin{array} { l r }
\text { Beginning retained earnings } & \$ 50,000 \
\text { Ending retained earnings } & 70,000 \
\text { Dividends declared and paid } & 10,000 \
\text { Revenue } & 50,000
\end{array}$$ Calculate Ferrara Corporation's expenses.
A) $20,000
B) $30,000
C) $40,000
D) Cannot tell from the information provided.

Question

The following information is provided by the Ferrara Corporation: $$\begin{array} { l r } 
\text { Beginning retained earnings } & \$ 50,000 \
\text { Ending retained earnings } & 70,000 \
\text { Dividends declared and paid } & 10,000 \
\text { Revenue } & 50,000
\end{array}$$ Calculate Ferrara Corporation's expenses.
A) $20,000
B) $30,000
C) $40,000
D) Cannot tell from the information provided.

Quizplus · Accepted Answer

The net income can be calculated by adding dividends to the change in retained earnings: ($70,000 - $50,000) + $10,000 = $30,000. Since net income is revenue minus expenses, and we know the revenue is $50,000, the expenses must be $50,000 - $30,000 = $20,000.

The Following Information Is Provided by the Ferrara Corporation Calculate Ferrara Corporation's Expenses