Car and Auto Sisters had retained earnings of $18,000 on the balance sheet but disclosed in the footnotes that $3,000 of retained earnings was restricted for plant expansion and $1,000 was restricted for bond repayments.Cash of $2,000 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 $18,000 minus the total restricted amount ($3,000 for plant expansion + $1,000 for bond repayments), which equals $14,000. The cash set aside does not affect the calculation of available retained earnings for dividends.

Car and Auto Sisters Had Retained Earnings of $18,000 on the Balance