Ningbo Steel had year end 2010 and 2011 retained earnings balances of $5,000,000 and $6,000,000 respectively.The firm paid $100,000 of dividends in 2011.Based on this information,Ningbo Steel's net profit after taxes in 2011 was:

Question

Quizplus · Accepted Answer

The change in retained earnings from 2010 to 2011 is $6,000,000 - $5,000,000 = $1,000,000. This change includes the net profit after taxes for 2011 and any dividends paid out. Since the dividends paid out in 2011 are given as $100,000, the net profit after taxes for 2011 can be calculated as $1,000,000 (change in retained earnings) - $100,000 (dividends paid out) = $900,000. Therefore, the correct answer is (D) $1,100,000.

Ningbo Steel Had Year End 2010 and 2011 Retained Earnings