Net income is $100,000 and preferred dividends paid are $100,000 and common stock dividends paid are $100,000. Beginning retained earnings were $500,000. The ending balance in retained earnings would b:
A) $500,000
B) $300,000
C) $600,000
D) $400,000

Question

Quizplus · Accepted Answer

The ending balance in retained earnings is calculated by adding net income to the beginning retained earnings and then subtracting dividends paid. Here, the calculation is $500,000 (beginning retained earnings) + $100,000 (net income) - $100,000 (preferred dividends) - $100,000 (common stock dividends) = $400,000.

Net Income Is $100,000 and Preferred Dividends Paid Are $100,000