The Home Store reported the following figures: Retained Earnings,February 1,2013...........$20,000,000
Retained Earnings,February 1,2012...........$17,000,000
The company's fiscal year ends on February 1 each year.Net income for the fiscal year ending February 1,2013 is $5 million.What are the dividends declared for the fiscal year ending February 1,2013?

Question

Quizplus · Accepted Answer

The dividends declared for the fiscal year ending February 1,2013 can be calculated as follows:
Retained Earnings, February 1, 2013 = $20,000,000
Add: Net Income for year ending February 1, 2013 = $5,000,000
Total = $25,000,000
Less: Retained Earnings, February 1, 2012 = $17,000,000
Amount available for dividends = $8,000,000
Dividends Declared = Amount available for dividends - Retained Earnings, February 1, 2013
Dividends Declared = $8,000,000 - $20,000,000
Dividends Declared = $2,000,000
Therefore, the correct choice is B. The Home Store declared $2 million in dividends for the fiscal year ending February 1, 2013.

The Home Store Reported the Following Figures: Retained Earnings,February 1,2013