Grass Gadgets had sales of $30 million and net income of $2 million in 2015. Grass paid a dividend of $1.5 million. Assuming that their beginning balance for retained earnings was $3 million, calculate their ending balance for retained earnings.
A) $2.5 million
B) $3 million
C) $3.5 million
D) $4 million

Question

Quizplus · Accepted Answer

Retained earnings = Beginning balance of retained earnings + Net income - Dividends paid
Retained earnings = $3 million + $2 million - $1.5 million
Retained earnings = $3.5 million

Grass Gadgets Had Sales of $30 Million and Net Income