Lakeview Industries had sales of $40 million and net income of $2 million in 2012.Lakeview paid a dividend of $1.5 million.Assuming that their beginning balance for retained earnings was $4 million,calculate their ending balance for retained earnings.
A)$4.5 million
B)$2.5 million
C)$3 million
D)$4 million

Question

Quizplus · Accepted Answer

The ending balance for retained earnings is calculated by adding net income to the beginning balance of retained earnings and then subtracting dividends paid. So, $4 million (beginning balance) + $2 million (net income) - $1.5 million (dividends) = $4.5 million.

Lakeview Industries Had Sales of $40 Million and Net Income