Statement of Retained Earnings 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 the net income to the beginning retained earnings and then subtracting the dividends paid to both preferred and common stockholders. Starting with $25 million, add $7 million net income, subtract $1 million for preferred dividends, and $3 million for common dividends, resulting in $28 million.