If there was no beginning retained earnings, net income of $20,000, and ending retained earnings of $6,000, how much were dividends?

Question

Quizplus · Accepted Answer

The formula for ending retained earnings is: Beginning Retained Earnings + Net Income - Dividends = Ending Retained Earnings. With no beginning retained earnings, the equation is $0 + $20,000 - Dividends = $6,000. Solving for Dividends gives $20,000 - Dividends = $6,000, so Dividends = $14,000.

If There Was No Beginning Retained Earnings, Net Income of $20,000