Statement of Retained Earnings TriCycle, Corp. began the year 2008 with $25 million in retained earnings. The firm earned net income of $7 million in 2008 and paid $1 million to its preferred stockholders and $3 million to its common stockholders. What is the year-end 2008 balance in retained earnings for TriCycle?
A) $25 million
B) $28 million
C) $32 million
D) $36 million

Question

Quizplus · Accepted Answer

The year-end retained earnings are calculated as the beginning retained earnings plus net income minus dividends paid. Starting with $25 million, adding $7 million net income, and subtracting $4 million in total dividends ($1 million to preferred and $3 million to common stockholders) results in $28 million.