Use the information below for Focal Point Corp.for 2017 and 2018 to answer the following question:
$$\begin{array} { l r }
\text { Retained earnings, December } 31,2017 & \$ 300,000 \
\text { Retained earnings, December } 31,2018 & 345,000 \
\text { Dividends payable, December } 31,2017 & 19,000 \
\text { Dividends payable, December } 31,2018 & 29,000 \
\text { Net income-2018 } & 150,000
\end{array}$$ 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 2018?
A)$95,000
B)$105,000
C)$140,000
D)$150,000

Question

Use the information below for Focal Point Corp.for 2017 and 2018 to answer the following question:  
$$\begin{array} { l r } 
\text { Retained earnings, December } 31,2017 & \$ 300,000 \
\text { Retained earnings, December } 31,2018 & 345,000 \
\text { Dividends payable, December } 31,2017 & 19,000 \
\text { Dividends payable, December } 31,2018 & 29,000 \
\text { Net income-2018 } & 150,000
\end{array}$$ 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 2018?
A)$95,000
B)$105,000
C)$140,000
D)$150,000

Quizplus · Accepted Answer

The increase in retained earnings from 2017 to 2018 is $45,000 ($345,000 - $300,000). Since net income was $150,000 and is added to retained earnings, but the retained earnings only increased by $45,000, the difference must have been paid out as dividends. The dividends payable increased by $10,000 ($29,000 - $19,000), which means the declared dividends were $105,000 ($150,000 - $45,000 + $10,000).

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