A corporation had year end 2004 and 2005 retained earnings balances of $320,000 and $400,000, respectively. The firm reported net profits after taxes of $100,000 in 2005. The firm paid dividends in 2005 of
A) $0.
B) $20,000.
C) $80,000.
D) $100,000.

Question

Quizplus · Accepted Answer

Retained earnings at the end of 2005 = Retained earnings at the end of 2004 + Net profit after taxes - Dividends
$400,000 = $320,000 + $100,000 - Dividends
Dividends = $20,000

A Corporation Had Year End 2004 and 2005 Retained Earnings