Statement of Retained Earnings Night Scapes, Corp. began the year 2008 with $10 million in retained earnings. The firm suffered a net loss of $2 million in 2008 and yet paid $2 million to its preferred stockholders and $1 million to its common stockholders. What is the year-end 2008 balance in retained earnings for Night Scapes?
A) $5 million
B) $8 million
C) $9 million
D) $15 million

Question

Quizplus · Accepted Answer

The beginning retained earnings were $10 million. With a net loss of $2 million, the balance becomes $8 million. After paying $2 million to preferred stockholders and $1 million to common stockholders, the retained earnings reduce by $3 million, resulting in a year-end balance of $5 million.