The ending retained earnings balance of the Brown Hat restaurant chain increased by $4.3 billion from the beginning of the year.The company had declared a dividend of $1.5 billion.What was the profit earned during the year?

Question

Quizplus · Accepted Answer

The increase in retained earnings of $4.3 billion includes the net income earned during the year as well as any other changes to the company's equity accounts. Therefore, the net income earned during the year can be calculated as:
Net income = Increase in retained earnings - Dividends paid
Net income = $4.3 billion - $1.5 billion
Net income = $2.8 billion
Therefore, the correct answer is (C) $5.8 billion.

The Ending Retained Earnings Balance of the Brown Hat Restaurant