Use the information below for Focal Point Corp.for 2016 and 2017 to answer the following question. $\begin{array}{lr}
\text { Retained earnings, December } 31,2016 & \$ 300,000 \
\text { Retained earnings, December } 31,2017 & 345,000 \
\text { Dividends payable, December } 31,2016 & 19,000 \
\text { Dividends payable, December } 31,2017 & 29,000 \
\text { Net income-2017 } & 150,000
\end{array}$ ? Assume that there were no retained earnings transactions other than those dealing with dividends and net income.How much dividends did Focal Point declare during 2017?
A) $95,000
B) $105,000
C) $140,000
D) $150,000

Question

Quizplus · Accepted Answer

The increase in retained earnings from 2016 to 2017 is $45,000 ($345,000 - $300,000). Since the net income for 2017 was $150,000 and this is the only source of increase in retained earnings (aside from dividends), the difference between the net income and the increase in retained earnings is the amount of dividends declared. Therefore, dividends declared = $150,000 (net income) - $45,000 (increase in retained earnings) + $10,000 (increase in dividends payable from $19,000 in 2016 to $29,000 in 2017) = $105,000.

Use the Information Below for Focal Point Corp ? Assume That There Were No Retained Earnings Transactions Other