The retained profits balance of The Fruit Drop Company was $40 000 on the first day of the year. Profit during the year was $20 000. Near year-end a $10 000 dividend was declared that is to be paid in the following year. Year-end retained profits are:
A) $70 000.
B) $60 000.
C) $50 000.
D) $40 000.

Question

Quizplus · Accepted Answer

- Start with the beginning balance of retained profits: $40 000
- Add the profit during the year: $20 000
- Subtract the dividend declared (but not yet paid): -$10 000
- Year-end retained profits = $50 000

The Retained Profits Balance of the Fruit Drop Company Was