The ending Retained Earnings balance of Juan's Mexican Restaurant chain increased by $3.2 million from the beginning of the year.The company declared a dividend of $1.3 million during the year.What was the net income earned during the year?

Question

Quizplus · Accepted Answer

The increase in Retained Earnings is equal to Net Income minus dividends. 
Therefore, we have: 
Retained Earnings increase = Net Income - dividends 
$3.2 million = Net Income - $1.3 million 
Net Income = $4.5 million.
Therefore, the correct answer is C) $4.5 million.

The Ending Retained Earnings Balance of Juan's Mexican Restaurant Chain