Wheeler Corporation had retained earnings as of 12/31/10 of $15 million.During 2011,Wheeler's net income was $7 million.The retained earnings balance at the end of 2011 was equal to $20 million.Therefore,

Question

Quizplus · Accepted Answer

Since Wheeler's net income for 2011 was $7 million and the retained earnings balance increased from $15 million to $20 million, that means $2 million was transferred from income to retained earnings and $1 million was transferred from paid dividends to retained earnings. Therefore, Wheeler paid a dividend in 2010 of $2 million (not A or C) and did not purchase treasury stock in 2010 (not D).

Wheeler Corporation Had Retained Earnings as of 12/31/10 of $15