Statement of Retained Earnings Soccer Starz,Inc.started the year with a balance of retained earnings of $25 million and ended the year with retained earnings of $32 million.The company paid dividends of $2 million to the preferred stock holders and $6 million to common stock holders.What was Soccer Starz's net income for the year?
A)$7 million
B)$15 million
C)$40 million
D)$49 million

Question

Quizplus · Accepted Answer

The change in retained earnings from the beginning of the year to the end is calculated as:
Retained Earnings at end of year - Retained Earnings at beginning of year = Net Income - Dividends
Substituting the given values, we get:
32 million - 25 million = Net Income - (2 million + 6 million)
7 million = Net Income - 8 million
Net Income = 7 million + 8 million
Net Income = $15 million. Therefore, the best choice is B, $15 million.