Net income is $1,000,000 for the year, EBT is $2,500,000, retained earnings in January were $5,000,000, preferred dividends paid for the year are $100,000, common stock dividends paid for the year are $300,000, and common shares outstanding are 1,000,000. What are end- of- year retained earnings?
A) $5,600,000
B) $5,900,000
C) $6,000,000
D) $7,100,000

Question

Quizplus · Accepted Answer

End-of-year retained earnings are calculated by adding net income to the beginning retained earnings and then subtracting any dividends paid. Here, it's $5,000,000 + $1,000,000 - $100,000 - $300,000 = $5,600,000.

Net Income Is $1,000,000 for the Year, EBT Is $2,500,000