TriCycle, Corp. began the year 2013 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 2013 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 by adding net income and subtracting dividends paid from the beginning retained earnings: $25 million + $7 million - $1 million - $3 million = $28 million.