Sooner Company has had a net income of $8,000,$5,000,$12,000,and $10,000 over the first four years of the company's existence.If the average annual amount of dividends paid over the last four years is $3,000,what is the ending retained earnings balance?
A)$47,000.
B)$35,000.
C)$23,000.
D)$7,000.

Question

Quizplus · Accepted Answer

The total net income over four years is $35,000 ($8,000 + $5,000 + $12,000 + $10,000). The total dividends paid over four years is $12,000 ($3,000 x 4). The ending retained earnings balance is the total net income minus the total dividends, which is $23,000 ($35,000 - $12,000).

Sooner Company Has Had a Net Income of $8,000,$5,000,$12,000,and $10,000